Month: September 2020

Vaca Muerta Gas Pipeline to Brazil: A $5 billion project announced

The Argentine diplomacy in Brazil advances with the project to build a 2,400-kilometre gas pipeline to join Vaca Muerta with Porto Alegre. The mega-project will cost almost $5 billion, and its viability is already studied. The initial plan foresees the laying of 1,430 kilometres from Neuquén to the border with Brazil, in Uruguayana, and another 600 kilometres from there to Porto Alegre, where it connects to the gas distribution network of southern Brazil.

Fiscal deficit increased 751% in one year

The state’s fiscal accounts are still in the red: last month, they closed with a deficit of 89.499 billion pesos ($1.18 bn), because spending increased 56.9% year-on-year, while income increased by only 32.4%. Inflation had an increase of 40.7% for the same period. The August deficit increased by 751.1% concerning a year earlier; in eight months, a shortage of 4.2% of GDP has accumulated.

YPF. A court ruling hurts it on a $70 million river transport contract

A judicial setback stopped YPF from being able to save at least $70 million on a new river contract to transport fuel to northwestern Argentina. The case in question has to do with a bidding process carried out by the oil company last year, which awarded the service to the Horamar Shipping Company, which had offered a contract of $67.2 million, which implies a saving of $72.8 million concerning the previous rate of the National Shipping Company, worth $140 million per year.

Financial Times: It’s the government, not the pandemic, that’s driving business out of Argentina

The Financial Times echoed the growing wave of foreign companies leaving Argentina, frightened by the interventionist measures. The FT pointed out that recent departures include the auto parts company Axalta, the German chemical company BASF and the French companies Saint-Gobain Sekurit and Pierre Fabre. Latam, the largest airline in Latin America, notes, had already decided to leave the country in July. The enormous challenges that the government is imposing on the companies with draconian capital controls, import restrictions and price freezes are making business in some sectors, such as those of mass consumption, unsustainable, with everything that is happening now, forget about a foreign company making any investment.

Falling bonds cause losses of $1.2 billion to the BCRA and the Anses

The exchange measures announced on Tuesday night by the Central Bank (BCRA) produced damage in the power of intervention on the so-called “financial dollars” that the government had achieved with the debt swaps, besides affecting the patrimony of the public entities that participated in that operation. The abrupt devaluation of up to 15% that the new debt bonds suffered after the announcements caused an accounting loss of about $1.2 billion in the holdings of some $24 billion exchanged by the BCRA and the Sustainability Guarantee Fund (FGS), which administers the Anses, the two official entities that had the most significant participation in the restructuring.

The government should deactivate the conflict to encourage foreign currency liquidation for $12 billion

Just when soybeans reached their maximum value in two years, getting a FOB price in local ports of $434 per ton, and in a context in which there are still some 18.3 million tons to be sold and another 8 million tons with a price to be fixed, which imply $12 billion in foreign currency to enter the national coffers, the new restrictions paralyzed the grain market.

Country risk is already up 14%

On September 10, JP Morgan Bank rebalanced the Argentine country risk based on the prices of the new bonds, the index fell almost 50% and placed at 1,101 units. The new restrictions announced by the Central Bank (BCRA) and the National Securities Commission (CNV) affected the quotations of the sovereign instruments issued for the exchange and brought the surcharge that Argentina must pay to get into debt to 1,258 points, an increase of 14.26% in only eight days.