Download Headlines 04rd October

Headlines 04rd October
Argentine Oil Company finds way to invest in Vaca Muerta and elude legal action from Repsol
One day after the Argentine government extended the deadline to legalize undeclared cash, energy
company Bridas International gave new life to the BAADE energy bonds, the most relegated portion of
the whitewash scheme, by saying it would snap up 500 million dollars of the paper.
European Union considering punitive duties on Argentine bio-diesel
Argentine bio-diesel producers will fight European Union proposals to impose punitive duties on imports
from the country, saying the move would remove its biggest export market and raise prices in Europe.
Argentina credit rating conditioned by poor credibility and unreliable stats, says Moody’s
An upgrade of Argentina’s credit rating depends on the government taking measures to boost data
credibility while compensating investors holding defaulted debt and companies for expropriated assets,
said Gabriel Torres, Argentina’s sovereign credit analyst at Moody’s Investors Service.
CFK criticises US courts: 'they want to lead us to default’
President Cristina de Kirchner has accused part of the United States judiciary of wishing to take
Argentina "to default", comparing the nation's situation with that which currently faces US counterpart
Barack Obama.
Griesa accuses Argentina of 'evading' court orders
New York judge Thomas Griesa has once more ruled against Argentina in the nation's battle with the
vulture funds, determining that the jurisdiction of the bonds that entered the debt swaps of 2005 and 2010
cannot be changed.
Car production climbs 4.7%, exports drop 8.7%
Production of automobiles increased 4.7 percent in September compared to the volume registered during
the same month in 2012, while exports dropped 8.7 percent year-on-year.
Uruguay and Singapore sign open skies agreement including hub and regional flights
Singapore has signed a new Open Skies Agreement with Uruguay. The agreement allows designated
airlines to fly between both countries and it is more liberal than conventional ones, said the Singapore
Ministry of Transport in a statement on Wednesday.
Uruguay’s annual inflation in September reached 9.02%; minister confident it will be brought
down
Uruguay’s consumer inflation soared 1.36% over August in September boosted by increases in energy
and fuel, transport, milk and other basic items, according to the latest release from INE, the government’s
* By M. Fernanda
data office. This means inflation in the last twelve months climbed to 9.02% from a month ago (8.86%)
and 8.2% in the first nine months of 2013.
Uruguay 2012/13 soybean crop was record in volume, area and yield
Uruguay’s latest soybean crop was the highest in history, 2.76 million tons with an increase in the area
planted and in yields according to the latest survey from the Ministry of Agriculture and Livestock. The
area dedicated to soybean climbed 20% and reached 1.049.000 hectares.
Brazil offers Paraguay Mercosur chair, but apparently Argentina is not convinced
Brazil offered Paraguay the rotating chair of Mercosur as of next December, as part of an overall
understanding to have the landlocked country return to the block, while accepting the incorporation of
Venezuela as a full member of the group. Paraguay rejects Venezuela’s membership alleging it was done
against the will of its Senate and in breach of national and international law and of the Mercosur charter.
UK offers Paraguay cooperation in transport and infrastructure at embassy ceremony
The UK is back in full force in Latinamerica, and particularly in Paraguay, the fastest growing economy
in the region, said Foreign Office minister Hugo Swire during the inauguration of the British embassy in
Asunción, which had been shut down back in 2005.
* By M. Fernanda
Argentine Oil Company finds way to invest in Vaca Muerta and elude legal action from Repsol
One day after the Argentine government extended the deadline to legalize undeclared cash, energy
company Bridas International gave new life to the BAADE energy bonds, the most relegated portion of
the whitewash scheme, by saying it would snap up 500 million dollars of the paper.
The move gives Bridas a way to invest in the Vaca Muerta formation without risking legal action from
Spanish firm Repsol. Bridas, controlled by the powerful Bulgheroni brothers, took pains to highlight its
investment, which would be destined to developing unconventional resources, would not involve
undeclared cash.
“The investment will not be less than 500 million dollars and has the objective, among others, to invest on
unconventional energy projects,” the company said, adding that the move has nothing to do with the
whitewash law since it is a foreign direct investment by foreign residents.
“By doing this Bridas confirms its investment process in Argentina,” the company added.
The tax amnesty program offers citizens the possibility to turn undeclared cash without paying back taxes
or needing to specify where the money came from. BAADE energy bonds offer a 4% annual interest rate
but any investor can snap up the paper that matures in 2016.
Only 26 million worth of BAADE bonds have been sold so far.
Bridas move to snap up the bonds comes after the company sealed a preliminary memorandum of
understanding with YPF in late 2012 to exploit shale oil reserves in the areas of Bajada de Añelo and
Bandurria in Vaca Muerta. The agreement contemplated an investment of 1.5 billion dollars but expired
60 days after being signed amid pressure from Repsol.
Even though Bridas did not reveal details on the bond subscription it did say it would begin to disburse
the cash “as the projects reach final agreements,” implying there were already negotiations for specific
works, and the State would not be able to use the money on just any initiative.
Bridas owns a 40% stake in Pan American Energy, which is majority owned by UK’s BP and is the
second-largest hydrocarbons producer in Argentina.
Bridas is an oil company owned by the Bulgheroni brothers, ranked by Forbes as the richest men in
Argentina. In March 2010 the Chinese firm CNOOC bought half of Bridas assets for 3.1 billion. A year
later Bridas bought a refinery and 450 fuel stations from ExxonMobil (ESSO) in Argentina, Paraguay and
Uruguay. The company is currently carrying on an expansion of its refinery in Campana and expects to
invest one billion dollars on the project.
European Union considering punitive duties on Argentine bio-diesel
Argentine bio-diesel producers will fight European Union proposals to impose punitive duties on imports
from the country, saying the move would remove its biggest export market and raise prices in Europe.
The EC has proposed duties of 20% equivalent to between 216 and 245 Euros per ton on bio-diesel
imports from Argentina, and of between 121 to 178 Euros a ton on imports from Indonesia alleging
* By M. Fernanda
‘dumping’.
Currently a provisional duty of 8% has been implemented.
Additionally the EC allegedly has plans to remove Argentina from the list of developing countries and
thus finalizing some tariff privileges. The EU absorbs 70% of Argentina’s bio-diesel exports.
The 28-nation bloc accuses producers in the two countries of selling their product at unfairly low prices,
harming European producers.
“We will seek to defend ourselves against this decision, which we consider unfair,” said Luis Zubizarreta,
head of Argentine bio-fuel body CARBIO.
“Clearly, Argentina will not be able to export so much as a litre to Europe, and European bio-diesel prices
will rise. We will have to produce less bio-diesel,” he said.
If backed by EU governments at a vote later this month, the duties could be imposed by the end of
November.
That in turn could prompt a legal challenge from Jakarta and Buenos Aires at the World Trade
Organization, a source familiar with the issue said.
Together, the two countries account for 90% of EU bio-diesel imports and more than a fifth of the bloc's
annual consumption.
Among the firms set to be hit by the duties are agri-business Bunge Ltd and Louis Dreyfus Commodities,
which face duties of 216 and 239 Euros per ton respectively on their exports from Argentina.
A report by Buenos Aires-based consultants IES this week showed that Argentina's bio-diesel production
fell by 40% in the first eight months of 2013 from the same period last year, while exports fell nearly 60%
in the same timeframe.
If backed by EU governments at a vote later this month, the duties could be imposed by the end of
November.
Argentina credit rating conditioned by poor credibility and unreliable stats, says Moody’s
An upgrade of Argentina’s credit rating depends on the government taking measures to boost data
credibility while compensating investors holding defaulted debt and companies for expropriated assets,
said Gabriel Torres, Argentina’s sovereign credit analyst at Moody’s Investors Service.
Moody’s rates Argentina’s local-law dollar bonds at B3, or six notches below investment grade. In March
the ratings company cut the country’s foreign-law bonds one level to Caa1, the same as Cuba and Belize,
to reflect increased default risk from the country’s legal fight with holders of defaulted bonds in U.S.
courts. The local-law B3 rating has been in place since 2005.
A U.S. Appeals Court upheld previous orders saying Argentina must pay 1.33 billion dollars to holders of
non-performing bonds from the country’s 95 billion dollars default in 2001, led by hedge fund Elliott
Management Corp. The effects of the ruling are being delayed until the U.S. Supreme Court decides
* By M. Fernanda
whether to review the case. Any decision on paying the so-called holdouts would probably be a political
decision, Torres said.
“Argentina has enough money; it’s a political decision not to pay” Torres said on Thursday in at a
Moody’s conference in Buenos Aires. “It’s positive that political decisions are easier to change than a big
fiscal deficit or excessive debt.”
The payment would represent 3.8% of the country’s 34.7 billion of foreign currency reserves.
However Torres advanced that the most likely scenario is that the US Supreme Court rules against
Argentina and then the credit rating could be lower. But he pointed out two different situations: if
Argentina enters in default for legal reasons in its debt under foreign legislation, and does not impact the
rest of its sovereign debt, “it’s possible that the downgrading will be only for the first case”.
But much will depend on Argentina’s reaction: if it finds credit probably in Europe to pay and then
decides who can collect and who can’t.
Argentina has argued that an unfavourable ruling would imperil and threaten all sovereign debt restructuring, with an major impact on world finances. The IMF and France among others and the US
Treasury at some point have upheld such arguments.
President Cristina Fernandez has vowed to only pay the holdouts a fraction of their claims, or about 30%
of face value in line with what other investors received in restructurings in 2005 and 2010.
South America’s second-largest economy could improve its credit quality by reporting more reliable
economic data, letting the IMF conduct its Article IV review on economic policies and resolving pending
arbitration cases, according to Torres.
It’s the government’s lack of credibility and unwillingness to pay part of its debt that pushes Argentine
credit risk to the highest in the world, even as the country is growing faster and has lower debt ratios and
greater gross domestic product per capita than most of its peers in Latin America, underlined Torres.
The cost to protect against Argentine default in five-years with credit-default swaps is the highest in the
world at 2,455 basis points, according to data compiled by CMA Ltd. The extra yield investors demand to
own Argentine debt instead of U.S. Treasuries is 1,022, the third-highest in emerging markets.
CFK criticises US courts: 'they want to lead us to default’
President Cristina de Kirchner has accused part of the United States judiciary of wishing to take
Argentina "to default", comparing the nation's situation with that which currently faces US counterpart
Barack Obama.
"The US president sees his budget rejected and it is news in all the newspapers across the world. They
have already done this to me, in 2010, Argentina did not have a budgets because we did not have enough
hands in Congress," the head of state explained during the presentation of 520 houses in San Juan.
Addressing Judge Thomas Griesa's latest decision against Argentina, in which he determinied that the
jurisdiction of the bonds that entered the debt swaps of 2005 and 2010 cannot be changed, Kirchner was
* By M. Fernanda
defiant.
"We will not be watching with our arms folded," she warned.
In addition, she stated that “Argentina will honor its commitments”, alluding to a possible negative rule
by the US Supreme Court regarding the so called ‘Vulture Funds’ case.
Griesa accuses Argentina of 'evading' court orders
New York judge Thomas Griesa has once more ruled against Argentina in the nation's battle with the
vulture funds, determining that the jurisdiction of the bonds that entered the debt swaps of 2005 and 2010
cannot be changed.
The Manhattan magistrate informed that the plan announced by President Cristina Fernández de Kirchner
on August 26, to reopen the exchange and change the payment jurisdiction of existing bonds, is "an
attempt to evade orders."
The government has already sent the law mandating the reopening of debtswaps to Congress, which was
passed without major opposition, although the project finally did not include fixing Buenos Aires as the
site of payment.
In today's declaration, Griesa effectively prohibited any modification to jurisdictions, acting on a new
request from the bondholders who have refused debt swaps.
Finance Secretary Adrián Cosentino, in a press statement released after the verdict was made public,
dismissed the importance of the new ruling, stating that "it does not add anything new to the case."
"It adds no new element to the case or to the judicial process, which is in another moment of discussion
and negotiation. Besides, this order has no relevance to the 7 percent of bonds still to be restructured," he
added.
Car production climbs 4.7%, exports drop 8.7%
Production of automobiles increased 4.7 percent in September compared to the volume registered during
the same month in 2012, while exports dropped 8.7 percent year-on-year.
According to data published by ADEFA, car production in September was registered at 71,928 units, or
2.9 percent higher than the previous month.
Uruguay and Singapore sign open skies agreement including hub and regional flights
Singapore has signed a new Open Skies Agreement with Uruguay. The agreement allows designated
airlines to fly between both countries and it is more liberal than conventional ones, said the Singapore
Ministry of Transport in a statement on Wednesday.
* By M. Fernanda
On top of allowing Singaporean and Uruguayan carriers to fly between both countries via or to any third
country, it also grants carriers the right to base their aircraft in the other country.
For instance, Singapore carriers can use Uruguay as a hub to operate to any other country without
restrictions on capacity, frequency or aircraft type. In addition, Singapore carriers can operate like a
domestic carrier in Uruguay and mount any number of services between cities, and vice versa.
This brings the number of Air Services Agreements Singapore has with other countries to more than 120,
of which more than 50 are Open Skies Agreements.
Parliamentary Secretary for Transport Muhammad Faishal Ibrahim signed the agreement Wednesday with
Uruguay vice-minister for foreign affairs Luis Porto.
Uruguay’s annual inflation in September reached 9.02%; minister confident it will be brought
down
Uruguay’s consumer inflation soared 1.36% over August in September boosted by increases in energy
and fuel, transport, milk and other basic items, according to the latest release from INE, the government’s
data office. This means inflation in the last twelve months climbed to 9.02% from a month ago (8.86%)
and 8.2% in the first nine months of 2013.
The government’s target for the financial twelve month year is inflation between 4% and 6%, but has
consistently missed the mark, despite monetary and credit efforts to contain the tendency.
The most significant item in September was transport, up 3.13% because of the new fuel prices. The
second strongest increase was Food and beverage, 2.23%. In this basket bakery goods were up 1,25%;
dairy produce, 1.32%, meats, 1.6% and fresh fruit, vegetables and legumes, 4.56% and 6.41%
respectively.
Housing was up 0.92% supported by a 1.22% increase in rent and2.59% in door tax. Cooking gas
meantime was up 6.19%, in line with the almost 10% increase in public utilities.
In August the consumer prices index was 1.04%. According to INE twelve month inflation to July was
8.75%; similarly to August, 8.86%.
Septembers’ inflation was far above the Central Bank survey of expectations among experts and
economists, with an average of 0.85%.
Economy and Finance minister Fernando Lorenzo has repeatedly said, the last time only two weeks ago,
that inflation at the end of 2013 will be very close to last year’s, at 7.48%.
Uruguay 2012/13 soybean crop was record in volume, area and yield
Uruguay’s latest soybean crop was the highest in history, 2.76 million tons with an increase in the area
planted and in yields according to the latest survey from the Ministry of Agriculture and Livestock. The
area dedicated to soybean climbed 20% and reached 1.049.000 hectares.
* By M. Fernanda
But the most outstanding record was in yields: 2.634 kilos per hectare, a significant increase over the
previous crop with 2.390 kilos and from the ongoing average in the range of 2.000 kilos per hectare.
Government and farmers agreed that the unsatisfactory yields was one of the barriers to keep increasing
land planted with soybeans but this last crop has swept aside the forecast. In effect the surge in area and
yield helped with the largest crop in history: 2.764.000 tons of soy.
Agronomist Fernando Rincon responsible for the report from the Ministry’s Agriculture Stats office,
DIEA, said that the high yield of the second harvest, 2.437 kilos per hectare compared to the 2.788 kilos
of the first harvest, was crucial since “the difference is usually much greater”.
For this coming crop Rincon estimates that the area planted will have a floor of 950.000 hectares,
although the definitive figure should be greater. For the last crop DIEA had estimated 883.700 hectares
but finally it was 950.000 hectares.
The report also showed that corn managed the second highest yield in the last ten years with 5.648 kilos
per hectare. The area planted was 121.500 hectares and the harvest reached 692.600 tons. Regarding
sorghum the crop was down 56% compared to 2011/12 with not much difference in the yields. The area
planted for this last crop was 48.500 hectares with an average yield of 4.262 tons per hectare and a total
production of 208.900 tons.
Brazil offers Paraguay Mercosur chair, but apparently Argentina is not convinced
Brazil offered Paraguay the rotating chair of Mercosur as of next December, as part of an overall
understanding to have the landlocked country return to the block, while accepting the incorporation of
Venezuela as a full member of the group. Paraguay rejects Venezuela’s membership alleging it was done
against the will of its Senate and in breach of national and international law and of the Mercosur charter.
The news was published in O Estado de Sao Paulo following the recent visit of President Horacio Cartes
to Brazil to meet with Dilma Rousseff, and is seen as a gesture towards Paraguay and a possible
mechanism to avoid all the legal inconsistencies questioned by Asunción.
The information was provided to the newspaper by a minister from Rousseff cabinet and close to the
negotiations.
However O Estado also points out that the pro tempore chair of Mercosur as of next December is still
under discussion with the other group’s members particularly Argentina which is entitled to the post
based on alphabetical order, after Venezuela’s time is over.
“The spirit of Venezuela is not to make any claims. Venezuela is the main source of friction with
Paraguay, and Caracas wants to overcome the discrepancies and its incorporation to Mercosur which still
requires the formal approval of the Paraguayan congress, which is something Cartes must negotiate with
the political system” says O Estado.
And in this deal the greatest problem “is Argentina which is not willing to lose its turn in presiding over
Mercosur to Paraguay”.
The Sao Paulo daily also points out that a minister close to President Cartes said that Asuncion is
* By M. Fernanda
planning the return of Paraguay to Mercosur by the end of the year and the offer from Rousseff provides
an important negotiation element with Congress, so that it finally agrees to approve the incorporation of
Venezuela as full member of Mercosur”.
O Estado underlines that during the whole of the one day state visit of Cartes, President Rousseff insisted
in the significance of the return of Paraguay to Mercosur, and the strategic relevance of Paraguay for
Brazil.
“Brazil is totally interested in the return of Paraguay and the fact that our bilateral relation, as can be seen
has remained intact”, Rousseff pressed on the Paraguayan delegation.
“El Universal” from Caracas echoed the Brazilian proposal to Paraguay. “Expectations are that if
Paraguay accepts, it will become the chair of Mercosur next December when the group celebrates its sixmonth meeting in Caracas”.“During their private conversation Rousseff insisted on Cartes the importance of Paraguay’s full return to
Mercosur and Unasur”, said El Universal.
Paraguay is taking its time and has been reluctant to accept the full return to Mercosur of which it argues
it never abandoned, but insists that the decision of the Paraguayan Senate must be respected as well as the
charter of Mercosur and international law.
Landlocked Paraguay is also trying to diversity its foreign trade and opportunities and has become an
observer of the Pacific Alliance. The latest foreign trade figures from a Paraguayan economics think tank
show that the European Union in the first eight months of the year absorbed 25% of exports, up 56% from
a year earlier, while Mercosur ranks second with 19% and a 33% increase. This is followed by Russia
with 13% and a 14% increase.
Brazil is urged because it has pledged to the EU that in the fourth quarter Mercosur would be presenting
its proposal to advance in the trade and cooperation talks, stalled because of political events on both sides.
Besides Brazil as of next January will be losing tariff advantages for some of its exports to the EU, but
needs a compact or at least organized Mercosur block to negotiate, (which includes Paraguay), unless it
opts with Uruguay to a two speed approach, leaving aside Argentina consumed by politics and its policy
to support local manufacturing and its domestic market.
UK offers Paraguay cooperation in transport and infrastructure at embassy ceremony
The UK is back in full force in Latinamerica, and particularly in Paraguay, the fastest growing economy
in the region, said Foreign Office minister Hugo Swire during the inauguration of the British embassy in
Asunción, which had been shut down back in 2005.
“This is an unequivocal signal of the UK new policy of strong links with Latinamerica, and the end of the
perception that the UK has been away from the region for too long” said minister Swire, who added that
besides Asuncion, the Foreign Office had reopened embassies in Haiti and El Salvador and a consulate in
the city of Recife, one of the fastest growing ports of Brazil.
Eight years and four months ago the British government decided to close the Asuncion embassy on
* By M. Fernanda
budget reasons.
Attending the opening ceremony of the embassy was Paraguayan Foreign minister Eladio Loizaga,
Deputy minister Federido Gonzalez and Manuel Maria Caceres and UK Ambassador Jeremy Hobbs
among others.
Minister Swire said the UK was wiling to support Paraguay in such areas as integrated transport, urban
infrastructure and managing people’s movements as was successfully proven during the 2012 London
Olympics. However it is up to Paraguay to come up with the list of priorities for a future cooperation.
“We’ve spoken of many areas with Minister Loizaga, in which the UK could be involved. We share the
government’s vision that wants to rebuild and modernize the country, that the economy grows sustainedly
and that all people can advance in an atmosphere of democracy, equal opportunities and fairness. And this
criteria is not new nor is the long relation between UK and Paraguay dating back to well over a century”,
said Swire.
The minister underlined that “it was an extraordinary moment to return to Paraguay, one of the fastest
growing economies in the region and in Latinamerica. Our duty is to further strengthen our diplomatic
commitment and to help find new businesses and investment opportunities”.
One of the areas of cooperation, and very dear to Paraguayans, could be the restoration of the “Carlos
Antonio Lopez” railway. In effect minister Swire and the UK delegation visited the barracks where the
original British train from the mid 19ths century is under conservation and “was fascinated” with what he
saw and experienced.
The restoration of the train could be part of greater and more ambitious plan to reactivate the railways
system in Paraguay to help improve transport and infrastructure since the country has become one of the
world’s leasing exporters of grains and oilseeds.
Apparently and according to Paraguayan sources, ambassador Hobbs talked about such area of
cooperation.
* By M. Fernanda