The Argentine Government released late yesterday a document with an improved offer compared to its previous version. Issues in dollars maturing between 2030 and 2042 with an average life ranging from 7 to 15 years. Also noteworthy are the staggered coupons. In the last hours, the bondholders announced the counteroffer they had made to the Government. Two large groups that were under these clauses said they submitted a joint proposal for $36 billion in cash flow relief over nine years.
After more than two months of confinement, the consequence is that the sale of analgesics to alleviate muscle pain increased by 25%, according to data from the Union of Pharmacists and Biochemists (SAFYB). More powerful anti-inflammatory prescribed drugs, such as tramadol, also increased by 7%. On the other hand, six out of ten Argentines gained weight during the quarantine.
The CCL dollar rose 2.6% to 112.69 pesos while the MEP (stock market but only traded in Argentina) increased to 109.41 pesos, bringing the gap to 64.6%. To support the official dollar, the BCRA lost $1.12 billion so far in May.
Due to the quarantine, during April there was only one real estate transaction in the province of Buenos Aires, according to information provided by the Association of Notaries of the region this Thursday. In percentage terms, the year-on-year fall represents 99.98%. This freezing in the deeds was also reflected in the amounts, since the total was 99.95% lower than in April 2019.
Exports of beef, poultry and pork increased by 17% in the first quarter of the year and totalled 249,223 tons, thus surpassing the 213,091 tons exported in the same period last year. The most important destinations were China, Chile, Israel and Germany.
March indicators show a drop in production of 29.6%, a collapse that would deepen in April. According to INDEC, in the third month of the year, the use of installed capacity in this segment was 28.7%. In the sector, they estimate that this number could have fallen to 10% during the last month. In March, sales of the clothing sector and the white item (table linen, bed and bath) collapsed by 65.1%. The outlook does not look very encouraging for the future.
The fund committee should evaluate whether the country entered a "credit event" by not paying $503 million. Non-payment sets up a default that will end up triggering the Credit Default Swap (CDS). It does not change the situation of the sovereign issuer, Argentina, since it is an agreement between private parties: the fund that took out insurance on its Argentine bonds will be able to deliver them to the entity that has insured them in exchange for compensation. According to market estimates, this situation could trigger payments of between $1.3 and $1.5 billion.
The National Government's collection plummeted mainly due to a real decrease of 60% in the Income Tax, concerning that collected in 2019, following the postponement of due dates. The VAT collection fell by 13% due to a nominal increase of 25.2%, below the annual inflation rate for the period. At the national level, a decrease of 8% in the fuel tax was observed, although in this case, the daily dynamics is very variable.
With the current composition of the withholdings of 33%, keeping all other values constant, the tax burden per ton amounts to $165.49, which is equivalent to 45% of the market value of the product and represents 74.19% measured on the gross margin. The Soybean Chain Association (ACSOJA) proposes to reduce the current withholding from 33% to 20%, which could increase production to 68.5 million tons in the 2026/2027 agricultural season.
The new cereal campaign would reach a harvest of 22 million tonnes. Grain-equivalent exports, adding grain and flour, could get a record 15.5 million tonnes. Planting would grow by 3% over the previous cycle and could reach 7 million hectares. Wheat grain exports would generate revenues of $2.87 billion, with current prices of future shipments. External sales of flour would total another $227 million. The wheat chain could leave the country with a foreign exchange income of more than $3.1 billion during the 2020/21 trade cycle.