It has not exactly been the January that some investors were hoping for in Argentina.
The notorious “Rufo” clause (for rights upon future offers) in restructured debt contracts appears to have been the red herring that many had warned it was when the government cited it as an excuse for not cutting a deal with the holdouts last year, triggering Argentina’s default in July. Read more
Argentina's economy minister Axel Kicillof
If there’s anything certain about investing in Argentina at the moment, it’s that there is an unusually high degree of uncertainty over the outcome an investment.
As a result, investors were delighted when the economy minister Axel Kicillof said on Thursday that he wanted to “put an end to all speculation” and provide “certainty” about whether the government will be able to pay its bondholders next year.
The government will give holders of the $6.7bn Boden 2015 bond the option next week to collect their payment early, swap the local-law dollar-denominated bond for another one (the Bonar) that matures in 2024, or simply wait until the Boden bond matures next year. Read more
Argentines who can remember their last bout of hyperinflation in the late 1980s might have been bemused had they witnessed what was happening this week on Florida street in downtown Buenos Aires.
Despite inflation of around 40 per cent, the value of the dollar on the unofficial market (known as the “blue” dollar) was falling so fast on Monday that beyondbrics came across one currency exchange that refused to tell customers queuing to buy pesos what the price was, as it might have changed by the time they reached the counter.
The drop in the “blue” dollar on Monday was the biggest in months, however, it had been falling steadily ever since Alejandro Vanoli took over the central bank six weeks ago, when the dollar fetched nearly 16 pesos. On Monday it was selling at 12 pesos on Florida street – compared with the official rate of 8.5, which has remained fairly stable.
Who ever said that Argentina’s battle with the holdouts was getting boring? It may have been dragging on for an awfully long time now, but American Task Force Argentina (ATFA) is doing its bit to keep things spicy.
Today ATFA, which lobbies on behalf of what Argentina calls the “vulture funds”, released a limited edition of virtual player cards, each one dedicated to “individuals that have been reported as facilitating corruption and illicit money laundering in Argentina”. Read more
Uruguay has grabbed more than its fair share of headlines recently, thanks to its atypical and endearing president, José “Pepe” Mujica, and the exceptionally progressive policies he has championed, such as legalising cannabis.
But the tiny South American country’s presidential elections on Sunday will go largely unnoticed, as the nail-biting finish of the presidential race in Brazil monopolises attention.
Nevertheless, the two elections are remarkably similar. In both countries, a left-wing party that has ruled for the last decade is struggling to remain in power, with growing discontent as their economies slow down – although admittedly Uruguay’s economy remains much healthier than Brazil’s. Read more
Argentina’s energy sector is a constant headache for the government – the fact that there are tankers charging hefty daily fees as they queue up offshore to unload liquefied natural gas because there is nowhere to store it is just the most recent example.
But YPF, Argentina’s biggest energy company, has been a beacon of light in the gloom, with the country’s energy deficit being the single biggest reason why it is running out of dollars.
YPF has notched up a string of achievements since the state took back a majority stake in 2012, most recently announcing on Wednesday a $170m deal with Ecuador’s Petroamazonas to optimise production in the mature Yuralpa oilfield. Read more
Some honeymoon Michelle Bachelet has had. Her second presidency was welcomed in by a powerful earthquake in the Atacama desert, followed shortly afterwards by a raging fire in Valparaíso, while most recently a spate of terrorist attacks has been disturbing Chile’s normally relatively tranquil populace.
All this as the economy sputters to its slowest rate of growth since Chile was last shaken by a major earthquake in March 2010, with the central bank confirming the downward trend on Monday when it announced year-on-year economic growth in August of just 0.3 per cent. Read more
The bust-up between Argentina and its holdout creditors is getting uglier by the day. As the “vulture funds” do their best to prove that there is corruption at the highest levels of government, President Cristina Fernandez responded yesterday by accusing them of engaging in terrorism.
The increasingly dirty fight comes as the holdouts disdainfully reject the possibility that a deal with the private sector might materialise, so rescuing Argentina from its default situation. Aurelius Capital Management said on Wednesday that none of the offers presented by a group of Wall Street banks were even “remotely acceptable.” Read more
It may be difficult to argue convincingly that a default could be anything but bad for Argentina’s economy – the real question is just how bad – but it is less clear what it means for politics.
You might think that little could be of greater importance for leaders of a country in very serious danger of falling into default in a matter of hours than to be doing their utmost to prevent this from happening. Read more
Who will jump first in Argentina’s game of chicken with its holdout creditors as they race towards the abyss of sovereign debt default? Or will both drive off the edge?
Although just a few days remain until Argentina’s July 30 deadline to make bond interest payments – a failure to do so would result in default – it is still possible that one of the two parties will make a last-minute concession that would allow a deal to be made. Indeed, if a compromise is made, it is most likely to come at the eleventh hour. Read more
As Argentina comes to terms with its 1-0 defeat by Germany, it is already half time in a critical showdown with so-called “holdout” creditors.
Two weeks have elapsed since Argentina entered a month-long grace period after failing to make interest payments to bondholders on June 30, and two weeks remain until it will default for a second time in a dozen years if those payments have still not been made by July 30. Yet talks with the holdouts appear to have made precious little progress so far. Read more
When is bad news in fact good news? Take the case of Argentina, where it is being argued, somewhat counter-intuitively, that the recession looming on the horizon could be the economic cure that the government needs.
Certainly, what has most been bothering the government on the economic front has been the alarming rate of decline of foreign exchange reserves over the past two years. But after a devaluation in January managed to stabilise reserves at around $28bn, they have risen slightly in April. Read more
When the Pope met Queen Elizabeth on Thursday, there was one thing – doubtless to Argentine President Cristina Fernández’s great dismay – which was not on the agenda: the Falkland Islands (or, as the Argentine Pope might have called them, Las Malvinas).
As if to make up for that omission, Fernández ensured the disputed territory’s continued presence in Argentines’ minds by printing a map of the archipelago on a new 50 peso note (worth just over $6), with a stirring image of a gaucho who rose up against British rule in 1833 on the other side. Read more
Confused about what’s going on in Argentina? If so, don’t fret – you’re not the only one.
In the space of a day, Argentine debt was upgraded by Bank of America and downgraded by Moody’s. More baffling still, they cited much the same reasons – the level of reserves at the central bank. Read more
What a headache debts can cause. No one knows this better than Cristina Fernández, who after receiving mixed messages related to Argentina’s debt in recent days will have plenty to chew over on her transatlantic flight before she meets the Pope on Monday.
There was good news today when the Paris Club, a group of countries which Argentina owes about $10bn, invited their debtor to begin formal negotiations in May, after economy minister Axel Kicillof presented a repayment plan in January. Resolution of the Paris Club problem is not only a prerequisite for Argentina’s return to the international capital markets, but it could also help to get much-needed foreign investment flowing back into the country. Read more
Miguel Galuccio has three principal objectives for 2014: “to produce, produce and produce.”
To help achieve that aim, Galuccio, who has run the Argentine energy company YPF since the government expropriated a 51 per cent share from Spain’s Repsol in 2012, is looking for partners. Read more
With little more than a week left of his presidency, Sebastián Piñera is fighting on to the last.
On the anniversary of one of the most powerful earthquakes on record wreaking havoc in Chile just days before he came to power four years ago, Piñera trumpeted his government’s record in cleaning up the mess yesterday.
However much opponents may accuse him of massaging the numbers, with 97 per cent of the infrastructure destroyed now rebuilt according to official figures, it seems fair to say that Piñera did a decent job in keeping his promise to fix the problems by the end of his term. Read more
Is it the beginning of the end for what enthusiasts like to call “the trial of the century” in the world of sovereign debt restructuring?
Well, perhaps, but there could still be an painfully slow ending to a trial that has dragged on for the best part of a decade, after Argentina filed a petition on Tuesday – right on deadline – seeking a US Supreme Court review of an order to pay $1.33bn to “holdout” bondholders who refused to accept restructured debt after Argentina’s 2001 debt default.
There are now three possible scenarios as to how things could go for Argentina at the Supreme Court. Read more
It had all been going so well for Uruguay’s president, José “Pepe” Mujica. The passing of a groundbreaking law this month that will legalise and regulate the production and consumption of marijuana has earned him praise around the world.
This even helped Uruguay earn its status as The Economist’s first ever ‘country of the year’. So the resignation on Saturday of Mujica’s finance minister, Fernando Lorenzo, was a bit of a dampener as the year comes to an end. He will be replaced by the president of the central bank, Mario Bergara it was announced on Monday. Read more
It’s hot in Buenos Aires. So hot, that there has been a wave of blackouts this week as melting porteños, as residents of Argentina’s capital are known, jam the electric grid by cranking their air-conditioners up to full blast.
This has become an annual occurrence during heat waves in the southern summer, as continuous underinvestment in the electricity system – since utility rates were frozen over a decade ago – takes its toll. But tempers as well as temperatures have been rising – both on the streets where sporadic protests are disrupting daily life, and in the government, which has decided that the fault lies with the private companies providing the electricity, Edesur and Edenor. Read more