Category Archives: Argentina

(Reuters) In Argentina grains belt, farmers ready to ‘unsaddle’ as Peronists return

(Reuters) SALADILLO, Argentina (Reuters) – There is a saying among farmers when times are hard on the Argentine Pampas: “Unsaddle the horse until the sun comes out”. That saying is starting to spread in farm towns like Saladillo, after the populist-leaning Peronists won back power on Sunday.

This dusty soy, corn and cattle ranching town in the bread-basket province of Buenos Aires was a bastion of support for farm-friendly incumbent Mauricio Macri. He was seen here as a free-markets messiah when elected in 2015 after eight years of populist, protectionist rule.

Farmers “saddled up” by planting at record levels when Macri, only days into his administration, ditched the heavy handed trade controls and export limits that previous President Cristina Fernandez de Kirchner had put on corn and wheat.

Now she is back as the running mate of president-elect Alberto Fernandez, who will take office in December. Questions are swirling about his policies for the farm sector, Argentina’s main source of sorely needed export dollars.

Around Saladillo, a town soaked in farming, growers and traders said Fernandez would likely increase grains export taxes, which would hit profits. Some fear a full-on return to Fernandez de Kirchner’s policies, which included strict export limits during her two-term 2007-2015 administration.

“If that happens again, I will produce the minimum to get by, unsaddle, in other words, until the market comes back. We’ve done it before. We can do it again if we have to,” said Eduardo Bell, 63, who owns a 2,000-hectare farm and cattle ranch.

As popular as Macri is in Saladillo, where the town crest includes a cow and bags of wheat, his image nationwide had been battered by recession and high inflation. He came to power on promises or “normalizing” Latin America’s No. 3 economy after the distortions caused by robust state intervention in the markets under the Peronists before him.

But his orthodox policy signals were not enough to attract significant foreign direct investment to a country still plagued by cyclical financial crises and high business costs. The economy slumped, inflation ignited and debt fears rose.

And he underestimated the inflationary effect of his fiscal policies, which included cuts to public utility subsidies, which heaped more costs on already hard-hit voters and small businesses, including farmers.


Argentina is a major world supplier of soybeans, corn and wheat, as well as the No.1 exporter of soymeal livestock feed, fueling Asia’s shift in diet from rice toward animal protein.

But uncertainty abounds in Saladillo, a quiet community of 27,000 residents. While voters turned against Macri in the August primary vote nationwide, handing Peronist Fernandez a huge margin of victory, Saladillo stuck by him.

“I’m afraid they’ll come at the agricultural sector with every short-sighted policy they can think of, like export limits (quotas) and more export taxes,” said Roberto Vaccarini, 60, a cattle broker in the town as he went to vote for Macri.

“Production is going to go down, which means less investment and the farm economy stagnates.”

After voting at a country schoolhouse just outside Saladillo, one farmer and rancher praised Macri for lowering export barriers and taxes and said that the future looked uncertain under the Peronists.

“These four years have been great for us,” the farmer, who gave only his first name Oscar, told Reuters. “But we do not know what the Fernandez government is going to do.”


That uncertainty was reflected around the town, despite some moves by Fernandez to reassure the farm sector.

“Fernandez has not told us exactly what his plans are for the sector. When they don’t tell you what their policies are, it’s because they’re hiding something,” said Ernesto Marcenaro, 55, manager of a local agro-products company.

“If he wanted to transmit confidence he would say he plans to keep the markets open, support production and promote exports.”

(BBG) Argentina Strategists See ‘Dire’ Situation, ‘Signs of Panic’


  •  Investors reasses Macri re-election odds as support wanes
  •  JPMorgan says ‘negative feedback loop’ contributes to losses

Traders pounced on Argentine assets for a second day, sending bonds into distressed territory and the peso to a fresh low.

The moves stand out in what’s been a bad few days for emerging markets. All developing-nation currencies are down this week as the dollar strengthened, and MSCI’s gauge of stocks is set for its first weekly loss since February. Even so, Argentina is far ahead of the pack.

Investors are reassessing the odds President Mauricio Macri can be re-elected in October as the market-friendly leader struggles with soaring inflation and a recession. Polls show the race is too close to call, with Macri’s leftist predecessor, Cristina Fernandez de Kirchner, whose years in power were marked by import restrictions and currency controls, staging a surprising comeback.

Here’s what strategists and are saying about the rout:

Tania Escobedo Jacob, a strategist at RBC Capital Markets in New York:

  • Recommends shorting the ARS
  • “Price controls have been ineffective in the past and Macri has previously criticized policies of market intervention”
  • Latest measures to contain inflation “could be taken as a sign of panic as Macri’s popularity falls in the polls and Kirchner capitalizes on the deterioration in economic prospects”
  • “Preserving financial stability and containing inflation without inflicting more pain to a contracting economy is a necessary condition for Macri to maintain his chances of reelection; it does not look good for him”
  • “Political continuity is still the scenario that most investors are discounting and I think that this week some might be reassessing that view”

Roger Horn, senior EM strategist at SMBC Nikko Securities America in New York:

  • Commenting on Wednesday’s plunge, said “on almost everything there were mostly only sellers. That said, there was some buying interest but at really low levels which sellers were not (yet?) willing to accept”
  • “We spent a lot of the day chatting with investors and asking each other why — ‘capitulation, no local buyers and everybody is long’ was the best we could come up with”

JPMorgan economists Diego Pereira and Lucila Barbeito:

  • Support for Argentina’s Mauricio Macri is eroding as pressure on credit premium and exchange rate “reverberates into higher expected inflation.”
  • “Negative feedback loop” and inflation YTD performance are the main drivers behind “Argentina’s dire situation”
  • “The market seems to be looking for a circuit breaker”
  • Argentina government’s political strategy “seems inconsistent with the necessary conditions to remain in office”
  • The incumbent facing the populism in a run off appears to be the “dominant strategy,” but political risk on populism return weighs on financial variables
  • JPMorgan raises doubts on the central bank attempt to use the FX band ceiling as a nominal anchor due to lack of intervention power in the spot market
    • FX ceiling is 15% distant higher, could maximize FX pass-through to inflation

Citigroup analysts led by Dirk Willer, the head of EM fixed income strategy:

  • “Certain credible polls show her with a lead against Macri among undecided voters. Isonomia last week showed CFK at 45% vs. Macri at 36%. Other less reliable polls note a similar development, which seem to have spooked markets further”
  • “A weaker FX and sticky inflation will continue to undermine Macri’s candidacy”
  • “Markets see the outcome of the elections as binary, with a return of the old administration potentially amounting to an eventual default”
  • “Assuming a 35% recovery value, the 2yr CDS the market is now pricing a likelihood of CFK winning around 40% (depending on assumptions of the likelihood of Macri vs a moderate Peronist winning). This can rise to 50% in our mind”
  • “We continue to think that the earliest point to consider Argentina from the long side is early August, in case the market overshoots on the CFK likelihood of winning. We don’t think that this is the case yet”

Alberto Bernal, chief EM and global strategist at XP Investments in New York:

  • “Regardless of the recent performance of asset prices, we maintain our longstanding view. Policy continuity will most likely remain in place, and Argentina will NOT default on its debt ex-post the presidential election”

(EXP) Confissões encurralam Kirchner: Ex-Presidente refugia-se no estatuto de parlamentar para não ser presa no maior sistema de corrupção da história

(EXP) Os Cadernos da Corrupção encurralam a ex-Presidente e atual senadora Cristina Kirchner enquanto fazem uma série de delatores e de presos. Em apenas duas semanas, há 14 presos, 13 delatores e um fugitivo implicados numa trama sistémica que, só em obra pública, pode ter roubado até €32 mil milhões em 12 anos.

Intimada a depor esta semana, Kirchner não aceitou perguntas do juiz limitando-se a entregar uma declaração escrita na qual se diz vítima de uma perseguição do Governo, da imprensa e da Justiça. Não dedicou uma só palavra ao conteúdo da acusação, a de liderar uma quadrilha, aqui denominada “associação ilícita”.

O juiz Claudio Bonadio deve processar e pedir a prisão da ex-PR nos próximos dias e ela só não será presa devido à imunidade parlamentar que o cargo de senadora lhe confere e contra a qual seria necessária uma decisão de senadores também questionados pela Justiça. A semelhança com o processo ‘Lava Jato’ no Brasil não é coincidência.

“É uma associação ilícita clássica, de manual. Nunca vi uma prova com estas características que já permite saltar muitos passos de uma investigação deixando-nos muito mais perto de um julgamento. Temos a radiografia completa do delito”, diz o procurador Carlos Stornelli.

Enquanto Cristina Kirchner se calava, ex-aliados rompiam o pacto de silêncio. O ex-presidente da Câmara Argentina da Construção, Carlos Wagner, um aliado do kirchnerismo, confessou o esquema que ele mesmo ajudou a montar a pedido do ex-Presidente Néstor Kirchner (2003/07) e que continuou no Governo de Cristina (2007-15). As licitações de todas obras públicas eram decididas pelos empresários que devolviam aos Kirchners entre 10% e 20% do custo.

Um cálculo preliminar aponta um montante de €10 milhões (10%) ou €20 milhões (20%) em subornos apenas sobre a obra pública. O valor representa até 6% do PIB em 12 anos de gestão kirchnerista. Investigadores do Conselho Nacional de Investigações Científicas e Técnicas (CONICET) apontam para uma quantia superior a €32 mil milhões.

Wagner confessou como se pagavam os subornos milionários e Claudio Uberti, ex-braço-direito do ministro Julio de Vido e do próprio Néstor Kirchner, confessou como se cobravam. O diretor do órgão de controlo das concessões sobre autoestradas entre 2003 e 2007 e “embaixador paralelo” nos negócios ilegais relacionados com Venezuela e Angola deixou o país perplexo. Confessou ser um arrecadador dos Kirchners, confessou que o dinheiro pertencia aos empresários, que o ato era ordenado pelo casal Kirchner, que a rede de corrupção era muito mais profunda e extensa do que se imaginava, que o dinheiro era levado em dezenas de malas aos cofres que os Kirchners instalaram na sua própria residência na Patagónia e que usavam o avião presidencial como transporte.

Quando as malas de dinheiro eram pequenas, eram entregues no próprio gabinete de Néstor Kirchner na Casa Rosada. Quando o volume era maior, a entrega acontecia na residência particular dos Kirchners ou mesmo na residência oficial. Cristina Kirchner presenciou várias entregas. “Certa vez, quando entreguei as malas, vi que havia outras 20 malas no apartamento”, contou. “No dia em que Néstor Kirchner morreu (27 de outubro de 2010), havia €53 milhões no apartamento”, revelou.

A confissão coincide com o relato minucioso que o motorista Oscar Centeno revelou nos Cadernos da Corrupção, entretanto já superado pelas delações. Centeno disse que a entrega das malas arrecadadas pelo Ministério do Planeamento era feita todas as quintas-feiras. Nos demais dias, vinham os arrecadadores de outros ministérios.

O ex-piloto do avião presidencial Tango 01, Sergio Velázquez, confirma ter transportado regularmente dezenas de malas para o Sul. As malas iam cheias e voltavam vazias numa repetição constante da operação.

(Reuters) IMF says supports Argentina floating exchange rate as peso tumbles

(Reuters) The International Monetary Fund said on Monday a target exchange rate for the peso will not be a condition of a financing deal with Argentina, as the currency closed more than 6 percent weaker at a record low of 25 per U.S. dollar.

Argentina requested a “high access stand-by arrangement” from the IMF last week after the peso depreciated rapidly, prompting the central bank to sell reserves and hike interest rates to 40 percent in a bid to contain one of the world’s highest inflation rates and stop the peso’s slide.

The bank sold $408 million (£300.8 million) in reserves on Monday as part of its effort to shore up the peso. During all of last week, the currency weakened 6.30 percent, and for the first 11 days of May it weakened 12.03 percent.

The Merval stock index rose 2.16 percent on Monday.

In a statement, an IMF spokesman said the Fund had not discussed any specific target for the exchange rate with Argentine authorities during negotiations in Washington.

“Argentina has a floating, market-determined exchange rate, and we fully support that,” the spokesman said. “The exchange rate should continue to be determined by market forces, with the central bank continuing to use all the policy tools that are at its disposal.”

The IMF negotiations carry political risks for President Mauricio Macri. Many Argentineans blame IMF-backed policies of the late 1990s for the country’s 2001-2002 economic meltdown. Some opposition politicians and activists have voiced concerns that the deal being drawn up in Washington will require painful fiscal belt tightening.

Opposition politicians have even demanded any deal with the IMF pass through Congress but Federico Pinedo, the leader of Macri’s party in the Senate, said that would not be necessary.

“It is expressly stated in the Argentine laws that this is a negotiation that corresponds to the president,” Pinedo told Reuters in an interview.

In an earlier statement, the IMF said its board would discuss Argentina at an informal meeting scheduled for Friday. The Fund said that meeting was “part of our usual process of briefing the board on negotiations for high access IMF programs.”


Weak fundamentals, skittishness regarding devaluation and concern over Argentina’s drought-hit soy harvest are pressuring the peso lower.

High interest rates will have a negative impact on activity, and the weaker peso resulting from a floating exchange rate regime will add to already sky-high inflation, but both are necessary to prevent a deeper crisis, Treasury Minister Nicolas Dujovne said.

“We will have somewhat less growth, and somewhat more inflation,” Dujovne told reporters on Monday. “It is obvious that will happen.”

The central bank said 617 billion pesos (£23.2 billion) of central bank notes known as Lebacs would mature on Tuesday. That is less than the 670 billion pesos worth that traders had expected. Because of the peso’s volatility, the bank decided to buy back some of the assets.

Interest rates on the notes have been rising in secondary markets, as the bank is widely expected to hike rates in Tuesday’s auction to entice traders to roll over their maturing notes.

“The possibility of a complete renewal of the maturing (Lebacs) is not expected,” consultancy Portfolio Personal said in a note, adding that in the four auctions so far this year, 14 percent of maturing Lebacs had not been renewed.

Argentina has also received proposals for $3 billion worth of repurchase deals from banks in recent weeks, Finance Minister Luis Caputo told reporters. In recent months, the country has inked $2 billion in such deals with Credit Suisse and HSBC.

Unions marched through the city centre on Monday to protest the IMF deal and Macri’s increases in utilities prices, part of his effort to reduce the fiscal deficit.

In a statement, Macri’s office said he had spoken by phone with U.S. President Donald Trump on Monday morning, and that Trump had said he supported Macri’s discussions with the IMF. The United States has the most voting power of any IMF member country, with 16.5 percent of the votes.

(Reuters) Argentine stocks rise for 13th straight session, hit record high

(Reuters) Argentina’s leading Merval stock index rose for a 13th straight session on Tuesday, the longest streak in its history, as growth picks up and polls show the market-friendly government is likely to win in October’s legislative elections.

The index rose 1.3 percent on Tuesday to close at 26,682 points after surging to a record-high 26,691. In a banner year for emerging market stocks, the Merval has outperformed regional peers, climbing 58 percent so far this year compared with 31 percent for Chile’s IPSA and 27 percent for Brazil’s Bovespa.

The rally accelerated in August after President Mauricio Macri’s coalition performed better than expected in congressional primaries, seen as a dry run ahead of the Oct. 22 midterm vote. Most crucially, Macri’s candidate nearly beat former populist President Cristina Fernandez in a key Senate race.

“The stock index’s movement comes in a context of positive economic data at a local level, amid polls that favor the [ruling coalition] ahead of October’s congressional elections,” Buenos Aires investment bank Puente wrote in a Tuesday note.

Energy companies led the gains, with Sociedad Comercial del Plata up more than 7 percent and local shares of Brazil’s Petrobras up more than 5 percent. Oil company shares, including state-owned YPF SA, have surged since the government suspended domestic fuel price controls late last month.

Economic indicators released after the August primary have continued to show improvement, potentially giving Macri’s candidates a boost. The economy expanded 2.7 percent year-over-year in the second quarter, government data showed last month, while poverty fell to 28.6 percent.

While Macri’s “Let’s Change” coalition will remain a minority in both houses of Congress, a strong performance would strengthen its hand in negotiations with opposition lawmakers to advance its pro-business agenda, including reforms to the country’s tax code and capital markets regulations.

More recent polls have shown Macri’s candidate, former education minister Esteban Bullrich, ahead of Fernandez in the Senate race for Buenos Aires province, home to nearly 40 percent of the country’s electorate.

A defeat for Fernandez would reduce the likelihood she returns to the presidency in 2019, a prospect that spooks foreign investors. Her two terms from 2007 to 2015 were marked by interventionist policies such as capital controls and expropriations.

“The markets are rising because of future events that we believe will take place,” Claudio Zuchovicki, development manager at the Buenos Aires stock exchange, wrote on Twitter on Tuesday.

(Reuters) Argentina raises eyebrows with surprise 100-year bond sale

(Reuters) Argentina sold $2.75 billion of a hotly demanded 100-year bond in U.S. dollars on Monday, just over a year after emerging from its latest default, according to the government.

The South American country received $9.75 billion in orders for the bond, as investors eyed a yield of 7.9 percent in an otherwise low yielding fixed income market where pension funds need to lock in long-term returns.

Thanks to a stronger-than-expected peso currency, the government has increased its overall 2017 foreign currency bond issuance target to $12.75 billion from its previous plan of issuing $10 billion in international bonds, Finance Minister Luis Caputo told reporters in Buenos Aires.

Argentina is going to the international capital markets to help finance a fiscal deficit of 4.2 percent of gross domestic product this year. Caputo said Argentina has $2.6 billion in bonds left to be issued this year. The new paper could be denominated in euros, yen or Swiss francs.

The new bond had a coupon of 7.125 percent, the finance ministry said in a statement that hailed success of the sale as evidence that Argentina had regained “credibility and confidence.”

Still, the move came as a surprise given Argentina only last year ended a decade-long dispute with creditors over its 2002 default and residents tend to frown upon accumulating debt in dollars.

“Implicitly, this shows market confidence that the government will be able to change the idiosyncrasy of the country and will end the borrow and default cycles. Will it?” said Edgardo Sternberg, Emerging Market debt portfolio manager at Loomis Sayles.


Argentine sovereign bond yield spreads over U.S. Treasuries widened six basis points, the widest in a month at 412 basis points. Argentina’s 2038 dollar bond fell 1.5 cents while the 2046 bond issue fell 2.6 cents.

The 2032 par bond was down by 1.5 percent.

Though the bond appeared to be well oversubscribed, some investors questioned the wisdom of investing for a such a long term in a country as volatile as Argentina.

“It’s awfully premature for Argentina to issue 100-year bonds,” said Jorge Piedrahita, chief executive officer of Puma Investments. “When you look back in history, I’m not sure we can find a 20-year period where Argentina has not defaulted.”

Citigroup Inc and HSBC acted as lead book runners on the deal, while Nomura Securities and Banco Santander were co-managers.

Such long-term bonds are unusual, particularly in emerging markets. Mexico issued a 100-year bond in 2010.

Since taking office in late 2015, President Mauricio Macri has implemented several market-friendly reforms to deliver on his promise of normalizing Argentina’s economy after years of heavy state intervention and non-payment of international debt obligations under the previous government.

He ended a decade-long dispute with creditors that allowed it to re-enter global credit markets, but Argentina lacks an investment grade rating. S&P and Fitch rate the sovereign a B with a stable outlook, while Moody’s has the debt at B3.

The country sold 400 million Swiss francs ($410.64 million)in debt in March, and Caputo said on June 7 that Argentina would issue peso and euro bonds later this month.

Many Argentines, with memories of the severe economic crisis following a 2002 default, took to social media to express their surprise, some with a touch of humor. One asked if Argentina would exist in 100 years, and another said at least cockroaches would pay off the debt.

Axel Kicillof, former finance minister who led negotiations with holdouts under populist ex-President Cristina Fernandez, accused Macri of saddling 10 generations of Argentines with debt.

(BBC) Argentina ex-leader Cristina Fernandez charged in corruption case


Cristina Fernandez leaves a court building in Buenos Aires, Monday, April 13, 2016
Cristina Fernandez has accused current President Mauricio Macri of plotting against her

Former Argentine President Cristina Fernandez de Kirchner has been charged over corruption allegations.

A federal judge approved charges of illicit association and fraudulent administration against Ms Fernandez.

Judge Julian Ercolini also ordered the freezing of $633m (£516m) of Ms Fernandez’s assets. She has previously denied any wrongdoing.

It is alleged that her government steered public contracts to a businessman close to her family.

Ms Fernandez has said the case is politically motivated and accused current President Mauricio Macri of plotting against her.

“Illicit association is a legal concept that has been used by all dictatorships to persecute their political opponents,” she tweeted.

Money in the monastery

In a court appearance in October, Ms Fernandez presented national budget documents as part of her evidence, highlighting that the accounts had been approved by parliamentary bodies and the country’s auditor general.

Judge Ercolini also approved corruption charges against two of Ms Fernandez’s former aides, ex-planning minister Julio de Vido and former public works Secretary Jose Lopez, as well as businessman Lazaro Baez.

Ms Fernandez is accused of favouring Mr Baez’s construction company, Austral, in the concession of contracts for public projects.

The company was granted more than 50 contracts for public projects during her two terms in office, Clarin newspaper reported.

In June, Mr Lopez was caught throwing bags filled with almost $9m (£7.3m)over the walls of a monastery, and was arrested on suspicion of money laundering.

Ms Fernandez served two terms from 2007 to December 2015. She succeeded her husband, the late Nestor Kirchner, who was in power from 2003 to 2007.

She is one of the main leaders of the opposition to the centre-right government of Mr Macri.

(JN) Volkswagen vai despedir 30 mil trabalhadores na Alemanha, Argentina e Brasil

(JNDepois do escândalo das emissões manipuladas, a marca anuncia o “Pacto para o futuro”, que passa por uma maior aposta na mobilidade sustentável: “Vamos ser os principais produtores de carros eléctricos”.

Volkswagen vai despedir 30 mil trabalhadores na Alemanha, Argentina e Brasil

A Volkswagen revelou um novo plano estratégico após o escândalo das emissões manipuladas nos automóveis a gasóleo.

E o primeiro passo do plano “Pacto para o futuro” é eliminar postos de trabalho em diversos países nos próximos cinco anos. “Vamos despedir 30 mil trabalhadores em todo o mundo, 23 mil na Alemanha e o resto no Brasil e na Argentina”, disse o administrador do grupo alemão, Karlheinz Blessing, em conferência de imprensa esta sexta-feira, 18 de Novembro.

Nas contas do grupo alemão, liderado por Matthias Müller (na foto), esta reestruturação vai ter um impacto de 3,7 mil milhões de euros por ano nos ganhos da empresa a partir de 2020. Ao mesmo tempo, a marca prevê investir 3,5 mil milhões de euros anuais nos próximos dois anos com a criação de nove mil postos de trabalho.

A marca foi severamente afectada pelo escândalo do “dieselgate”, em que as emissões de gases poluentes foram manipuladas em 11 milhões de veículos. Como resultado, a Volkswagen vai ter de pagar até 18 mil milhões de euros em indemnizações a consumidores e reguladores.

Fustigada pela tempestade que teve início em Setembro de 2015, a marca com sede em Wolfsburgo anuncia agora que o carro eléctrico é o futuro da indústria automóvel.
“Temos que investir milhões de euros em carros eléctricos e serviços digitais. A Volkswagen vai ser o primeiro produtor automóvel a avançar em força para o carro eléctrico”, disse o administrador do grupo, Herbert Diess, durante a conferência de imprensa na sede da empresa na Alemanha.

“A concorrência vai-nos atacar. Até este dia a Volkswagen não estava preparada, pois apesar de construirmos muitos veículos estamos a ganhar pouco dinheiro com eles”, sublinhou o responsável.

“Chegou a altura de fazer uma reforma, para nos prepararmos para o futuro. Este acordo vai tornar a Volkswagen competitiva. Vamos ser os principais produtores de carros eléctricos”, afirmou Herbert Diess.

A Volkswagen anunciou também a transformação tecnológica das fábricas na Alemanha para as tornar mais competitivas. Ao mesmo tempo, os carros eléctricos da marca vão ser todos produzidos em duas fábricas na Alemanha.

Herbert Diess destacou que as regiões da Alemanha também vão ter de contribuir para o novo plano, em particular “regiões que não são rentáveis”, como na América do Norte e do Sul.

“Vamos aumentar a produtividade em 25%. Vamos passar a construir mais carros com menos pessoas. Os próximos quatro anos vão ser difíceis, mas a Volkswagen está no bom caminho”, rematou o gestor.

(HB) Deutsche Bank Sells Argentina Subsidiary to Banco Comafi


cryan bloomberg

Germany’s largest bank has sold its subsidiary in Argentina to a local company as part of its withdrawal from South America.

Deutsche Bank agreed to sell the unit to Banco Comafi, which is based in Buenos Aires, as part of its larger strategy of streamlining its footprint.

In October, Deutsche Bank announced plans to cut 26,000 jobs and is in the process of withdrawing or cutting jobs in several countries including Brazil and Mexico in the Latin America region.

The bank’s Argentine unit has 86 members of staff and the sale is expected to go through in early 2017, following regulatory approval.

Deutsche Bank will keep serving its Argentine customers via its regional hubs.


(EurActiv) Argentina says Falklands claim unchanged by Brexit

(EurActiv) Argentinian President Mauricio Macri told EU leaders yesterday (4 July) that his country’s claim to the Falkland Islands remains unchanged following Britain’s vote to leave the EU.

“Brexit or not, our claim will never change,” Macri told reporters in Brussels after talks with European Union leaders.

Britain’s vote to leave the EU in a referendum on June 23 has cast uncertainty on the country’s global position, including whether European states would continue to back Britain’s possession of the Falklands.

Spain said after the vote that it was closer to asserting control over Gibraltar, the rocky outcrop on its southern tip, following the Brexit vote, prompting London to jump to the defence of its overseas territory.

Speaking about the Falklands, Macri added: “That is something long-lasting and we hope one day that we can discuss (the issue with Britain). It doesn’t mean that we cannot meanwhile have other cooperation with Britain.

“It is something I have already discussed with Cameron, I hope that with the next English prime minister we can find the space to start this dialogue. It will take years but it is important to start.”

Britain and Argentina fought a short but bloody war over the Falklands in the South Atlantic in 1982 after Argentine troops invaded and then prime minister Margaret Thatcher sent a naval task force.

The conflict claimed the lives of 649 Argentine soldiers, 255 British soldiers and three islanders.

In 2013, almost 100 percent of the Falkland Islands’ residents voted in favour of remaining under British rule.

Closer relations

Meeting the press with Argentinian Foreign Minister Susana Malcorra following the visit led by Macri, EU foreign affairs chief Federica Mogherini said that closer relations were already visible on three levels – globally, regionally and bilaterally.

“This is the first presidential visit to Brussels in almost twenty years from the Argentinian side and this is not coming by chance. This is the result of seven months of dedication and energy that President Macri and all his administration have put in renewing, on a completely new ground, relations with a series of international partners starting from the European Union,” Mogherini said.

As a key result of the meeting, the European Investment Bank has expressed its intention to restart full activities in Argentina, Mogherini stated. She said that the EU and Argentina are cooperating very closely with a view to the up-coming Argentinian presidency of the G20 in 2018, as well as on migration.

“We welcome the role that Argentina is playing and will continue to play on sharing the responsibility at the global level on hosting refugees. Argentina has a history of welcoming migrants and it is honouring its traditions and history in the best possible way,” Mogherini added.

The two sides are also cooperating on peace missions, the European Commission says in a press release. Argentina is an active player in UN peace missions and the EU will explore possibilities for Argentina to participate in EU CSDP missions. They also just signed a Memorandum of Understanding that will allow joint work in third countries on international cooperation.

Mogherini welcomed Macri’s leadership in moving forward relations between the EU and Mercosur, which led to a relaunch of negotiations on the EU-Mercosur Agreement last month. The two sides exchanged market access offers in May and negotiators met recently and agreed to hold the first round of negotiations in October.

She also pointed out the practical cooperation at a bilateral level between the EU and Argentina on issues as diverse as energy, business, trade, investment, as well as climate change, urban and regional development, security of citizens and countering drug trafficking.

+++ V.I. (FT) Argentina’s economic rise fuels rivalry with Brazil

(FT) South America’s two largest economies jealously eye each other’s handling of economic reform and corruption.

After pulling off a $16.5bn bond issue, the largest ever by an emerging markets nation, Argentina is the new favourite among investors. By contrast neighbouring Brazil, yesterday’s darling, is gripped by recession, political crisis and a graft scandal so encompassing it has dispatched some of the country’s most powerful people to jail.

South America’s two largest economies have a long history of mutual jealousy. But as each grapples with the problems of corruption and the economic slowdown that has followed the commodity price bust, the rivalry is taking on new meanings.

Brazil, to the annoyance of some Argentines, has a fiercely independent judiciary that has doggedly pursued an investigation into corruption at Petrobras, the state-owned oil company — a process that could lead to the impeachment of president Dilma Rousseff.

Argentina, meanwhile, has what many Brazilians desperately want: a reformist government. President Mauricio Macri’s administration, elected four month ago, has begun to reverse the economic legacy of the populist former president Cristina Fernández, including pushing through the record bond issue.

“I hope we can free ourselves of those who are addicted to power to satisfy their own political projects,” says Miguel Reale Júnior, a former Brazilian justice minister. “I hope Brazil becomes Argentina.”

Such a statement by a Brazilian politician would have been unthinkable just a few months ago. But it has been encouraged by the possibility that vice-president Michel Temer, who would replace Ms Rousseff should she face a formal impeachment process, could lead a similar reform effort.

Brazilians are brought up to believe their country is superior to Argentina in everything from football to the economy and foreign affairs. While Buenos Aires has long talked of reclaiming the tiny Falkland Islands — or Malvinas — from the UK, Brazil’s goal has been a permanent seat at the UN’s Security Council.

Now, though, such perceptions are being turned on their head.

As Brazil suffers its worst recession in a century, Mr Macri has moved to abandon economic interventionism, dismantle currency controls, liberalise trade and re-engage Argentina with the world economy. The International Monetary Fund forecasts that Brazil’s $1.5tn economy will flatline next year, while Argentina’s $438bn economy will grow 3 per cent. “Brazil is starting to resemble what Argentina once was,” says Otto Nagami, an economics professor at São Paulo’s Insper business school.

epa05243195 (FILE) A file picture dated 23 November 2015 shows then Argentininan President-elect Mauricio Macri during a press conference in Buenos Aires, Argentina. Macri is one of the allegedly involved as millions of leaked documents published on 03 April 2016 suggest that 140 politicians and officials from around the globe, including 72 former and current world leaders, have connections with secret 'offshore' companies to escape tax scrutiny in their countries. The leak involves 11.5 million documents from one of the world's largest offshore law firms, Mossack Fonseca, based in Panama. The investigation dubbed 'The Panama Papers' was undertaken and headed by German newspaper Sueddeutsche Zeitung and Washington-based International Consortium of Investigative Journalists (ICIJ), with the collaboration of reporters from more than 100 media outlets in 78 countries around the world. EPA/DAVID FERNANDEZ
Mauricio Macri has moved to restore normality to Argentina’s economy since taking office © EPA

During recent street marches against Ms Rousseff and her ruling Workers’ party, or PT, some demonstrators waved banners calling for: “Less Venezuela, more Argentina.”

“It is a symptom of Brazilians’ desperation,” says Rafael Alcadipani, an academic at the Getulio Vargas Foundation in São Paulo. “The hatred many feel towards the PT is even bigger than their hatred for Argentina.”

Yet while many would expect Mr Temer to enact Argentine-style reforms should he take over as acting president, he would face significant challenges. The Petrobras corruption probe could yet hit his own opposition PMDB party, while spending cuts would be unpopular.

In other areas, however, Argentines look enviously towards Brazil. Many cast an eye north to admire the strength of Brazil’s institutions, especially its judiciary.

Brazil also continues to attract significant foreign direct investment, which rose to $17bn in the first quarter of 2016 compared with $13.1bn in the same period last year, according to Alejandro Werner, head of the IMF’s western hemisphere department. In part, that is due to the resilience of Brazilian institutions.

Brazil is starting to resemble what Argentina once was

Otto Nagami, economics professor at São Paulo’s Insper business school

Argentina’s judiciary, by contrast, suffers from a “serious crisis of legitimacy”, says Guillermo Jorge, a criminal lawyer in Buenos Aires. While Brazilian judges have detained former presidents and some of the country’s richest men, “Argentine judges are not very brave”, adds Mr Jorge, a partner at Governance Latam, an anti-corruption group.

“They know that if you go after someone more powerful than you, they can destroy you in 15 minutes,” he adds.

The question of corruption has raised its head again in Argentina following a number of cases against senior officials in the administration of Ms Fernández.

Lázaro Báez, a businessman from Patagonia, was arrested this month after being accused of embezzlement and laundering money for Ms Fernández and her deceased husband and predecessor Néstor Kirchner. He denies the accusations. Other powerful figures are also being investigated by federal prosecutors, including Julio de Vido, a former planning minister, and cabinet minister Aníbal Fernández. They also deny wrongdoing.

But few Argentines expect these investigations to go far. Carlos Germano, a political analyst in Buenos Aires, points out that cases are being handled by “the same judges that just a year ago looked the other way”.

There is also a sense of a witch-hunt, given that Argentine judges are going after those who have left office while their peers in Brazil are pursuing those still in power.

“Nevertheless, a door has been opened and it is going to be very difficult to close it,” says Mr Germano, echoing a common sentiment around the region, where impunity is no longer tolerated as it once was amid the economic bust. “Society’s demands to see justice done are very strong.”ffrccuiowxdf

(FT) US appeals court clears way for Argentina bond sale

(FT) A US appeals court has cleared the way for Argentina to raise as much as$15bn to pay holdout creditors, enabling the Latin American sovereign to re-enter international capital markets after more than a decade on the sidelines.

The decision from the US District Court of Appeals in Manhattan affirmed a judge’s ruling to lift an injunction that barred Argentina from paying certain creditors, which subsequently pushed it into default in 2014.

The ruling followed brief arguments in a courthouse on Wednesday and removed a wild card that investors feared could unravel months of negotiations with creditors.

Argentina is now set to raise as much as $15bn through a somewhat complex debt sale next week. Proceeds from the deal will be used to first pay the country’s holdout creditors, including Elliott Management’s NML Capital and Aurelius Capital Management.

The battle between holdout investors and Argentina, triggered by the country’s 2001 default on more than $95bn of debt, had barred the sovereign from raising fresh capital in the past.

Argentina had reached agreements with 92 per cent of its creditors through debt exchanges in 2005 and 2010, while holders of $11.5bn of debt held out for better terms. Buenos Aires has since reached agreements with creditors that own more than $8bn of that debt.

The ruling is a victory for President Mauricio Macri, who set about ending the country’s impasse with creditors when he was elected last year and who has passed a wave of economic and financial reforms. The administration of Cristina Fernández de Kirchner, who was ousted from power in elections in 2015, refused to negotiate with the holdouts, isolating Argentina from capital markets.

Banks underwriting the forthcoming bond sale highlighted the newly passed measures, including the effective dissolution of stringent capital controls, as they marketed the transaction to investors this week. The country plans to sell between $12bn and $15bn of debt in five-, 10- and 30-year tenures.

The approval on Wednesday arrived a day before a deadline set for Argentina to pay holdout creditors, who declined to say if they would agree to an extension.

Edward Glossop, an economist with Capital Economics, said that caveat meant the 15-year saga with the holdouts was not yet over, although he believed it would be resolved shortly.

“Today’s ruling is a huge triumph for Argentina,” Mr Glossop said. “The issuance of external debt is likely to have a significant impact on the economy over the medium term.”

“The default is essentially now over,” said Marco Schnabl, a partner at Skadden, Arps, Slate, Meagher & Flom. He pointed out that there remains a small group of bondholders that represent about 10 per cent of the holdouts who have yet to reach agreements with Argentina and want to keep on fighting. “There are no serious threats here for Argentina,” he argued.

Mr Schnabl added that it was “incredibly unusual” for the appeals court to reach a decision so quickly, on the same day as the hearing, and to “rule from the bench”. Observers speculated that the plea in a letter from Alfonso Prat-Gay, Argentina’s finance minister, to the appeals court judges to reach a quick decision may have had its desired effect.

Mr Prat-Gay, in turn, may have been responding to a call last week from Jack Lew, US Treasury secretary, for the country to pay its creditors “as quickly as possible”.

Charles Blitzer, a former official at the International Monetary Fund and expert on sovereign debt restructuring, criticised the unequal treatment of the smaller holdout creditors, arguing that it could have “repercussions down the road”.

He pointed to Venezuela, which many analysts expect to default later this year. “The lesson for another big defaulter is to litigate first, and negotiate after they have gone to court. I don’t think that’s necessarily a good outcome,” he said.US-appeals-court-clears-way-for-Argentina-bond-sale-—-FT

+++ (FT) Argentina launches bond comeback roadshow

(FT) Investor interest in a multibillion dollar bond offering from Argentina has reached a zenith as the Latin American sovereign, sidelined from global debt markets since its 2001 default, launches a five-day marketing tour across the US and UK.

The sale, which is expected to eclipse $12bn, is a test of fund manager appetite for emerging market debt after a deep sell-off and subsequent rally, exacerbated by volatile commodity prices and fear of a slowdown in global economic activity.

Investors have been told that the offering could reach as much as $15bn across five-, 10- and 30-year tenures. Bankers have gauged investor demand for an 8 per cent yield on the 10-year notes with pricing on the other maturities expected to follow in due course, two investors said.

The bonds are likely to be sold the week of April 18, several people close to the situation added.

Despite eight defaults since its 1816 independence, the election of President Mauricio Macri, appointment of market friendly officials and deal with holdout creditors have burnished investor enthusiasm for new Argentine debt.

“The change in direction of policymaking has been radical,” said Alejo Czerwonko, an emerging markets strategist at UBS Wealth Management. “It has been a 180 degree turn. Structural reform in emerging markets is scarce and you are getting a whole lot of it in Argentina.”

The so-called non-deal roadshow, where bankers will pitch to investors onArgentina but not market a specific offering for sale, will begin in London and at the New York Palace in Manhattan on Monday.

Bankers and Argentine policymakers are also scheduled to travel to Los Angeles, Boston and Washington, according to an investor invitation obtained by the Financial Times.

Deutsche Bank, HSBC, JPMorgan and Santander have been hired to lead the transaction with support from BBVA, Citi and UBS.

Policymakers and bankers have been separated into two groups — Team White and Team Blue, a nod to the Argentine flag — for the roadshows.

Chart: Argentina's turbulent time in default

“Given this is the first sovereign transaction in over 15 years, it is paramount they go through great lengths and depths to explain the Argentina story, to explain how they’ll meet spending targets, how they’ll control inflation, how they are looking at reserves,” said Sean Newman, a portfolio manager at Invesco.

Proceeds from the $12bn-plus sale will be used to pay creditors of its defaulted notes, including funds managed by Paul Singer’s Elliott Management.

Argentine officials concede that the country is unlikely to be able to pay the holdout creditors by an April 14 deadline fixed by Thomas Griesa, the New York judge presiding over the case.

This is due to an April 13 hearing at the appeals court that will determine whether or not to uphold Judge Griesa’s decision to lift injunctions that prevent Argentina from paying the holdouts.

Although most observers expect Judge Griesa’s decision to be upheld, it will leave little time to execute a logistically complicated transaction.

Furthermore, if Argentina is not able to meet the April 14 deadline, the holdouts will then need to agree to extend it.

Even so, Argentina is likely to proceed swiftly to make the payment after US Treasury Secretary Jack Lew last week urged Argentina’s finance minister, Alfonso Prat-Gay, to pay all holdouts “as quickly as possible”.

Indeed, before the announcement that the roadshow would begin on Monday, local market operators in Buenos Aires had expected it to take place during the following week beginning April 18.

Mr Prat-Gay is already canvassing for funds from multilateral lenders at the Inter-American Development Bank’s annual meeting in the Bahamas on Friday, marking the beginning of an intense 10-day fundraising tour that will culminate with the IMF and World Bank Spring meetings on April 15—17.ffghhuyu

(FT) Panama Papers open new chapter in Argentina corruption drama

(FT) The Panama Papers have proved an embarrassment for Argentina’s new president Mauricio Macri — whose name appears in the leaked files — but have also exposed a broader problem of alleged corruption in South America’s second-largest economy.

The scandal revives questions about the former government of Cristina Fernández de Kirchner, and raises new ones over how serious is the new administration about weeding out corruption, a central issue in Mr Macri’s election campaign last year.

Emails obtained by the International Consortium of Investigative Journaliststhat were sent by employees at Mossack Fonseca suggest that the Panamanian law firm at the centre of the controversy attempted to hide or destroy evidence of its control of a subsidiary in the US that was being investigated by a New York hedge fund seeking payment on defaulted Argentine debt.

NML Capital, one of Argentina’s so-called “holdout” creditors that recently struck a deal with Mr Macri’s government, was seeking information from MF Corporate Services (Nevada) Limited. That firm had set up 123 shell companies for Lázaro Báez, an Argentine businessman and close associate of the Kirchner presidential couple.

NML’s aim was to seize around $50m-$60m that Mr Báez had allegedly sent abroad via the shell companies, arguing that the money had been gained corruptly through public works contracts won thanks to his connection with Ms Fernández and Néstor Kirchner, her husband and predecessor as president.

“Mossack Fonseca didn’t go full Kirchner and openly defy the judge — given a choice between co-operation or contempt of court the Kirchners would have chosen the latter — but they kept compliance to a bare minimum,” said a person with knowledge of the case.

Mossack Fonseca reportedly tried to block the subpoena by denying that MF Nevada were part of their group. The investigation by ICIJ, however, concluded it was wholly owned by Mossack Fonseca, which “took steps to wipe potentially damaging records from phones and computers to keep details of their clients from the United States justice system.”

Sara Montenegro, legal affairs director at Mossack Fonseca, told the Financial Times allegations that the firm had destroyed evidence in the US were “false”. In an interview with Ramon Fonseca in Panama City, she said the company, like many others, had a policy of destroying documents simply because of space constraints.

The holdouts agreed to drop all litigation against Argentina in return for receiving payment that will end the long-running debt dispute, which depends on the outcome of a New York appeals court hearing on April 13 that observers expect to go in Argentina’s favour.

Mr Báez was arrested after he landed in a private jet outside Buenos Aires on Tuesday night on his way to face questioning over accusations of embezzlement and money laundering. Mr Baez is accused by public prosecutor Jose Maria Campagnoli of laundering money on behalf of Nestor and Cristina Kirchner.

This month, senior officials of the previous government will appear in a spate of court hearings over a range of controversial policies of the previous Kirchner era, including murky public works projects. Last week, a transport secretary serving under the Kirchners was detained over the purchase at inflated prices of old and in some cases defunct trains from Spain and Portugal.

Ms Fernández herself is due to face questioning next week in the first of several cases expected against her over the central bank’s sale last year of peso futures well below value in order to stabilise the currency.

Mr Macri has persuaded even some of his opponents that he committed no wrongdoing by serving as director but not shareholder of companies owned by his father that appear in the Panama Papers. But he is yet to convince Argentines that he is wholly focused on attacking corruption.

“Solving the problem of corruption and impunity is one of the great challenges facing this government,” said Margarita Stolbizer, an influential congresswoman. She argues that the solution lies not only in investigating past misdeeds, but in establishing rules, procedures, standards and regulations to prevent them from happening again.

So far, analysts say that Mr Macri has been more successful in turning aroundeconomic and foreign policy than in tackling corruption. That is despite his success in last year’s elections owing much to a popular rejection of the perceived corruption of the previous Peronist administration.

Pointing to the wave of intolerance of corruption in Brazil that is jeopardising the future of President Dilma Rousseff, Ms Stolbizer said the same could happen in Argentina. “People become intolerant of corruption when they are hard up themselves. Otherwise, there is a great tendency to minimise the problem,” she said. Panama-Papers-open-new-chapter-in-Argentina-corruption-drama-—-FT-1

+++ (FT) Argentina lays groundwork for return to global debt markets

(FT)Marketing of about $12bn in bonds to kick off in New York and London.

Flags fly outside the central bank of Argentina in Buenos Aires

Argentina is laying the groundwork for its long-awaited multibillion-dollar bond salenext week, as it prepares for a return to global debt markets after its 2001 default.

Marketing of the sale by the Latin American country — which is expected to top $12bn — will kick off in New York and London on Monday, before bankers and Argentine policymakers travel to Los Angeles, Boston and Washington, two people familiar with the deal said.

Investors have been told the sale could reach $15bn. Argentina is believed to be returning to bond markets again in the second half of the year with another series of notes, swelling the full-year haul to as much as $20bn.

Deutsche Bank, HSBC, JPMorgan and Santander have been hired to lead the offering. The marketing will take the form of a so-called non-deal roadshow, where bankers inform fixed-income investors about Argentina and a possible bond deal, but do not market a specific offering for sale.

The roadshow would be handled by two teams of bankers, the people said. Team White and Team Blue — a reference to the Argentine flag — will include secretary of finance Luis Caputo, finance deputy minister Pedro Lacoste, and undersecretary of finance Santiago Bausili.

Argentina plans to use the proceeds to pay creditors of its defaulted notes, including funds managed by Paul Singer’s Elliott Management. Negotiations in New York have culminated in at least $5.8bn of settlements with holdout creditors since President Mauricio Macri took office last year.

In March a US judge agreed to remove an injunction that prevented Argentina from paying creditors who had already settled with it, without also paying the holdouts, after it met certain requirements.

A lower Manhattan court of appeals will consider the issue on April 13, a day before Argentina must make a payment to creditors.

Fund managers have expressed interest in the transaction despite the years-long legal battle, with yields on the notes expected to range between 7.5 per cent and 8.5 per cent.

One investor said Argentina was likely to stay in that price range, deciding on maturity as demand builds.

Investors said Argentina would have to pay concessions to move $12bn or more of paper. Fund managers were said to refuse 10-year debt that yielded 7.5 per cent, although three-year debt at that price was seen as absorbable.

“It is not as scary as before. The market has a very positive view of Argentina right now,” said Bianca Taylor, a senior sovereign analyst with Loomis Sayles. “They have a very qualified, market-friendly president who has appointed very qualified, market-friendly technocrats to every ministry.”


+++ V.I. (FT) Argentina nears $15bn bond issue in return to capital markets


Argentina's President Mauricio Macri talks to the press after a working meeting with Italy's Prime Minister Matteo Renzi at Casa Rosada in Buenos Aires on February 16, 2016. Renzi is on two-day official visit to Argentina. AFP PHOTO / JUAN MABROMATAJUAN MABROMATA/AFP/Getty Images©AFP

Argentina is on the verge of issuing the largest sum of debt by any developing economy nation since 1996 as the country seeks to end a long-running and rancorous debt dispute using fresh borrowing.

In global financial markets, the question is what rate Buenos Aires will be forced to pay after a 15-year market hiatus and who will want to invest in a country that has been guilty of serial defaults for the past 200 years.

On Monday, Mauricio Macri, Argentine president, agreed to a $4.65bn cash payment for four “holdout” creditors who refused to restructure debt after the country’s 2001 default, including Paul Singer’s Elliott Management.

The deal, which has not yet been finalised, paves the way for resolution of a legal battle that has frozen Argentina out of international markets.

Once the total cost of the accord has been calculated, Argentine finance minister Alfonso Prat-Gay has said it will be funded through $15bn of new bonds. Further debt issuance to fund government spending is expected later in the year.

This would make Argentina the largest issuer of hard currency bonds in emerging markets since Mexico borrowed $16bn 20 years ago, according to data provider Dealogic.

With requirements this substantial, any hope the country has of borrowing money at less than 8 per cent a year may be dashed said Sergio Trigo Paz, head of emerging markets fixed income at BlackRock, the world’s largest fund manager.

“We’re very happy that Argentina has reached an agreement with bondholders,” he said. “But with such a significant amount of debt to issue it will have to look at a higher clearing price.”

One European investment house has said it will only invest if Argentina offers to pay out an expensive, double-digit yield.

Greg Saichin, managing director of emerging markets fixed income at Allianz Global Investors, said the scale of debt required meant Argentina would be wise to stagger its new bond issuance.

“Argentina has a reformist government and it is staffed by ex-Wall Street people who know what they are doing but it still hasn’t fixed up its economy,” he said. “They will expose themselves if they bring too much paper to the market in one go. I’d advise them to start with an $8bn sale.”

Debt issuance by emerging market countries has been notably light so far this year as the strengthening US dollar and dwindling global appetite for risky investment raises the cost of borrowing.

Emerging market sovereigns have issued $19bn in hard-currency bonds in 2016, down from $25bn over the same period last year as large borrowers including Russia and Turkey remain absent from markets.

Since pro-business president Mauricio Macri took office in December markets have rallied and prices for Argentina’s existing bonds have lifted out of crisis territory. Yields, which move inversely to prices, have fallen in the last year and Bonar 2024 bonds, a possible point of comparison to new 10 year debt, now yield 7.9 per cent.

However, potential investors in new Argentine debt are likely to take into account the country’s poor record when it comes to repaying obligations. Since declaring independence from Spain in 1816, the country has defaulted on its external debt eight times.

Argentina argues that the real number is seven and that the last default, which is connected to the deal the country has struck with holdout bondholders, was only technical.Argentina-nears-15bn-bond-issue-in-return-to-capital-markets-FT

(FT) ‘Holdout’ hedge funds reject Argentine debt offer


Paul Singer, chief executive of Elliott Management©Bloomberg

Paul Singer, chief executive of Elliott Management

A group of US hedge funds roundly rejected Argentina’s attempt to remove a financial blockade that is preventing its access to international capital markets in a court filing on Thursday.

The “holdout” creditors, who refused to accept harsh haircuts in restructuring deals after Argentina’s 2001 default on $100bn, argued that the injunctions must remain in place to guarantee the success of negotiations that were resumed this month by the government of President Mauricio Macri, who took power in December.

The centre-right leader — who is on a mission to attract much-needed foreign investment — is hoping to put an end to a legal dispute that forced the country to default on its debt for the eighth time in its history in 2014. That was triggered by a 2012 court ruling that obliged Buenos Aires to pay the holdouts in full at the same time as paying holders of its restructured debt.

After Argentina made an offer earlier this month to pay the holdouts $6.5bn for $9bn of claims — which was accepted by two of the six leading holdout funds — last week the country’s lawyers asked a New York judge, Thomas Griesa, to order the holdouts to justify why the injunction should not be lifted.

The holdouts, who are led by US billionaire Paul Singer’s Elliott Management, argued that negotiations had “only just begun” when Argentina made a “divisive, take-it-or-leave-it” offer on February 5 that would only delay and complicate the negotiations that they wanted to lead to a “fair” settlement “promptly”.

“Authorising Argentina once again to violate plaintiffs’ contractual rights would upend negotiations that only now are just beginning in earnest and would risk new unwanted litigation,” argued the filing signed by the holdouts’ lawyers, explaining that the injunction was originally put in place to defend their contractual rights.

They said that the injunctions were not put in place, as some have argued, to force Argentina to come to the negotiating table, as it has now done, after the previous leftist government of Cristina Fernández resolutely refused to enter into discussions with what she called “vultures” and “financial terrorists”. ‘Holdout’-hedge-funds-reject-Argentine-debt-offer-FT

(EXP) Argentina chega a acordo com credores italianos

(EXP – click to see) O governo do novo presidente Mauricio Macri vai pagar 1,35 mil milhões de dólares aos 50 mil credores italianos que não aceitaram as reestruturações de dívida de 2005 e 2010. Buenos Aires está, também, em negociação com os fundos abutre norte-americanos com quem mantém um litígio em Nova Iorque desde 2013.

A Argentina vai pagar 900 milhões de dólares acrescidos de um “juro razoável” a acordar com os credores italianos detentores de títulos não reestruturados da dívida argentina, anunciou um comunicado conjunto do governo argentino e da Task Force Argentina. Esta entidade reúne 50 mil credores italianos que não aceitaram as reestruturações da dívida argentina em 2005 e 2010. O montante global deverá atingir 1,35 mil milhões de dólares (mais de 915 milhões de euros), o equivalente a uma valorização de 150% em relação ao valor original dos títulos.

O ministro das Finanças Alfonso Prat-Gay disse numa conferência de imprensa em Buenos Aires que este acordo resolve 15% da dívida argentina que não foi reestruturada. Daniel Pollack, o mediador nomeado pelo Tribunal de Nova Iorque que julga o litígio da Argentina com os fundos abutre desde 2013, afirmou, na segunda-feira, que a dívida reclamada por credores que não aceitaram as reestruturações soma 9 mil milhões de dólares (cerca de 8,2 mil milhões de euros).

O ministro das Finanças do novo governo do presidente Mauricio Macri, eleito em dezembro passado, afirmou, ainda, que este acordo com os credores italianos é um primeiro passo na direção de um entendimento para resolver o litígio com os investidores que não aceitaram as reestruturações. No caso dos designados fundos-abutre, como os do financeiro Paulo Singer, decorre um litígio desde 2013 nos tribunais nova-iorquinos. O juiz nova-iorquino Thomas Griesa tornou-se famoso ao decidir a favor dos fundos abutre. O anterior governo da presidente Cristina Fernández adiou a resolução do litígio. O atual governo, que iniciou esta semana negociações em Nova Iorque com os fundos-abutre, pretende resolver a contenda, mas não se vergará a um “juro inaceitável” exigido por parte de alguns desses fundos.

Em virtude das decisões do juiz norte-americano no verão de 2014, as agências de notação Standard & Poor’s e Fitch colocaram, desde 30 e 31 de julho daquele ano, a dívida argentina de longo prazo na situação de defaut selectivo ou restrito, abrangendo algumas linhas de obrigações.

(NYT) Argentina’s New President Moves Swiftly to Shake Up the Economy

(NYT – click to see)

Argentina’s new president, Mauricio Macri, whose devaluation of the peso has eroded salaries. CreditJorge Adorno/Reuters

BUENOS AIRES — Mauricio Macri clinched Argentina’s presidency last month by tapping into voters’ fatigue with a leftist political movement that had governed for more than 12 years. Campaigning on a platform of change, and promising to unite feuding factions while largely dodging specific policy proposals, Mr. Macri took 51 percent of the vote.

But now, just three weeks into his four-year term, Mr. Macri’s sweeping economic changes are roiling Argentina, accentuating the divide he wanted to bridge and leading some Argentines to doubt whether he will be a change for the better.

“They voted for him to get the government out, but they didn’t think about what was going to come,” said Damián Raspa, 36, a machine worker at an electronics factory from La Matanza, a working-class district of greater Buenos Aires where Mr. Macri lost heavily to his main rival in the election, Daniel Scioli.

Mr. Raspa, a father of two who earns about $615 a month, said he would now have to make his salary stretch because Mr. Macri’s governmentdevalued the peso by nearly 30 percent in mid-December, to more than 13 pesos to the dollar from 9.8; it later strengthened slightly.


Women looked at a board showing currency exchange rates recently in Buenos Aires.CreditEnrique Marcarian/Reuters

The devaluation and a slashing of export taxes favored influential farmers on Argentina’s Pampas lowlands who had speculated about such moves by hoarding their grain harvests. They struck an agreement with Mr. Macri’s government to immediately sell billions of dollars of grain stocks, like soy, to ease the shortage of funds at the Central Bank.

But while these agricultural exports are now more profitable for the farmers, for people like Mr. Raspa, the devaluation is eroding their salaries and fueling price increases as imports become more expensive.

In his first days in office, Mr. Macri has made quick-fire, market-oriented changes meant to reinvigorate the economy after sluggish business investment and growth in recent years.

In contrast, his predecessor, Cristina Fernández de Kirchner, who had bruising clashes with the farmers, preferred driving demand through policies like energy subsidies for consumers.

Paving the way for the devaluation, Mr. Macri scrapped most of Mrs. Kirchner’s currency controls, an unpopular measure that had thwarted foreign investment because businesses were unable to repatriate their profits. He is also expected to end bureaucratic procedures that prevented manufacturers from importing needed equipment and parts. As the government seeks to reduce the largest budget deficit in three decades, Juan José Aranguren, the energy minister, has said the costly energy subsidies are being reviewed.

Many Argentines welcome the changes. Daniel Álvarez, 57, who works at a hardware store in La Matanza, said that under the Kirchner administration, precarious Central Bank foreign reserves were being hemorrhaged to shore up the peso. “They didn’t leave a buck,” Mr. Álvarez said. “Both Macri and Scioli were going to devalue. There was no other option to get dollars in. Yes, it directly favors the farmers, but the idea is that indirectly it favors us.”

By cutting export taxes for farmers — and manufacturers, too — Mr. Macri wants to increase business profits; easing import restrictions will provide greater scope to reinvest these profits, driving production and, subsequently, economic growth, his advisers say. Mario Blejer, a former Central Bank president who was an adviser to Mr. Scioli, said Mr. Macri was on the correct path. “Without growth, the redistribution of income is impossible,” Mr. Blejer said. “And to grow, you need investment.”


Union workers and members of social and leftist organizations protested the government of President Mauricio Macri in Buenos Aires last week.CreditEitan Abramovich/Agence France-Presse — Getty Images

But in the short term, there is the danger of fueling inflation, which is already about 25 percent, according to unofficial estimates frequently used because the national statistics institute’s figures have not been trustworthy. In turn, if real wages do not keep up, battles could break out between the government and powerful trade union leaders. Political and social organizations are already panicked about Mr. Macri’s moves.

“We’re very angry and worried,” said Juan Grabois, a lawyer for theConfederation of Workers of the Popular Economy, which represents workers in Argentina’s gray economy, like recyclers and street hawkers. “This is the false theory of trickle-down economics that will only result in the destruction of Argentina’s social fabric.”

Eduardo Levy Yeyati, an economics professor at Torcuato di Tella University here and a visiting professor of public policy at the Kennedy School of Government at Harvard, said Mr. Macri, who had tiptoed around his plans during the campaign, now faced the hard political task of following through with adjustments even though the economy, boosted by the government’s pre-election spending, improved this year. “There’s a disconnection between perceptions and the economic reality,” said Professor Levy Yeyati, emphasizing the unsustainability of a large budget deficit and an overvalued currency. “It’s impossible to explain these things to the public when they feel like they’re doing O.K.”

Mr. Macri must also tread carefully, analysts said, because of his small margin of victory in the election. A decision to temporarily appoint Supreme Court judges by decree, bypassing Congress during its summer recess, was criticized as an overreach of executive power. This, together with moves viewed as steps toward the dismantling of a media law that is strongly endorsed by Mrs. Kirchner’s supporters, has left him less room for unpopular measures.

Mr. Macri has already moved to cool the simmering economic tensions, keeping Mrs. Kirchner’s price control programs in place for now and offering a small one-time payment to around eight million recipients of state pensions or child benefits.

Still, repercussions are already being felt. “It’s the workers who always pay for these crises,” said Raúl Lemos, 54, who manages a downtown paint store, as he clicked through an online price list showing that the price of some products had risen by 25 percent overnight. “Sales are going to drop.” Similarly, Sergio Camerucci, 52, who manufactures trophies and sells them to sports leagues, said the price of the plastic he needed to make the trophy bases rose by 20 percent after the devaluation.

Most economists expect the devaluation — and the accompanying raising of interest rates to anchor the peso — to result in anemic growth or a recession in 2016 before a rebound in 2017, with perhaps growth of 3.5 percent, according to Sebastián Vargas and Pilar Tavella, Barclays economists in New York. This year, growth will be 0.4 percent, according to the International Monetary Fund; other economists predict it will be higher.

Supporters of Mr. Macri seem to understand this progression. “The last 12 years were terrible,” Mr. Camerucci said of Mrs. Kirchner’s political movement, pointing to his falling sales over the last three years and the import restrictions, which made it difficult to buy the machinery he needed. “We have to be patient, but we are on a good path.”

Daniel Scatilazzi, 44, who was selling homemade pies and sandwiches from a stall, said he would suffer as prices jumped but understood Mr. Macri’s motives. “I’ll put up with it,” said Mr. Scatilazzi, a former supporter of Mrs. Kirchner who voted for Mr. Macri because he wanted change. “We have to give him time to work. Let’s see in six months if this bears any fruit.”