The price of crude oil continued its downward trend yesterday: the Brent barrel (reference for Argentina) lost 4.4% and closed at $ 28.70 since December it lost 55% of its value and left the production in Vaca Muerta in check. In the case of soybean cultivation, its price fell by 8% since December. Both commodities are essential to generate foreign exchange in the country.
Shares of Argentine companies on Wall Street plunged by up to 14% on Wednesday, coinciding with a sharp rise in country risk and a general fall in markets globally, amid the coronavirus pandemic. The main losses are registered by Edenor (-14.2%), Banco Francés (-10%) and Grupo Financiero Galicia (-9.6%), although the whole panel registers red. Meanwhile, the only action that advances is Tenaris, 2.5%. It happens because Argentina’s country risk, measured by JP Morgan, rose 5.6% to 3,812 units.
The North Sea Brent barrel for delivery in May dropped 2.8% to $27.91 in London. The WTI barrel for delivery in April is worth $25.36, 5.9% less than Tuesday at closing. The situation has caused YPF’s stock price to fall 7% to $3.22.
Argentine dollar bonds continued to plummet on Tuesday, falling to 7.2%, reflecting uncertainty about debt restructuring, pending the first official offer, amid increased global risk aversion due to fears of the effects of the coronavirus. With the new drops in Argentine bonds, Argentina’s country risk, as measured by JP Morgan Bank, rose 79 units, or 2.3%, to 3,546 basis points.
The Government launched a battery of economic measures aimed at protecting production, jobs and supplies. Among other actions, the budget line for capital expenditures will be increased by 40%, allocating 100 billion pesos ($1,5 billion) to infrastructure, education and tourism works; and a series of soft credit lines will be launched for about 350 billion pesos ($5.5 billion) to guarantee the production and supply of food and essential inputs, boost activity and finance the operation of the economy in this situation.
The U.S. law firm Cleary, Gottlieb, Steen & Hamilton (CGS&H), issued the formal request on behalf of the country to the Financial Industry Regulatory Authority (FINRA), the authority that shall authorize the eventual debt issuance, for the placement of new debt for $31.6 billion to redeem the liabilities issued from 2005 to 2019, with foreign legislation. The amount represents a straight-line deduction (elimination without owners’ consent) of 55% of the total debt recognized by the government of $68.8 billion.
The Total Market Basket (TMB) for a family of four – two adults and two children under ten years – cost 40,789.67 pesos ($644.6) in February, according to the National Institute of Statistics and Census (INDEC). The figure, which defines the Poverty Line, increased 1% over the previous month. The Basic Food Basket (BFB), which represents the level of indigence, rose 1.9% per month and was worth 16,785.87 pesos ($265.26). Year-on-year, the TMB rose by 47.9%, while the BFB rose by 51%.