The International Monetary Fund will send another mission to Buenos Aires on Monday to continue debt strategy talks and discuss “next steps,” an IMF spokesman said on Thursday, as Argentina seeks to renegotiate its $57 billion financing package. Julie Kozack, the IMF deputy director for the Western Hemisphere, and Luis Cubeddu, head of the IMF’s mission in Argentina, will lead the team. In their previous visit just over a week ago they said Argentina's sovereign debt was "unsustainable".
Soybean output for Argentina, is forecast at 54.5 million mt, up 3% on previous estimates in 2019-20 crop year (November-October), on good crop conditions across the country, according to the Buenos Aires Grains Exchange. The world's third largest soy producer and exporter is projected to export 8.2 million mt of soybeans in 2019-20, down 10% on the year. The country's soybean meal exports are forecast at 30.85 million mt, up 10%, while soybean oil shipment are projected at 6 million mt, up 14% year on year.
Buenos Aires Grain Exchange raised its forecast for Argentina's corn production to 50 million mt in 2019-20, up 1 million mt from the previous estimate, and not far behind the record 50.6 million mt harvest during the last season. Argentina, the third largest exporter of corn in the world, is likely to export 33.5 million mt of corn in 2019-20, compared to an estimated 36 million mt in 2018-19, according to the US Department of Agriculture.
The US Export-Import Bank (US Exim) has backed the export of oil and gas services equipment from the United States to Argentina with seven-year guarantee. The guarantee covers an $18.4mn loan from HSBC to A-Evangelista S.A. (AESA), a wholly-owned subsidiary of energy company YPF. The Argentinian engineering firm will use the financing to buy oil and gas services equipment from three small US-based businesses.
Argentine agricultural machinery factories recorded a 28.1% drop in production during 2019, according to a survey by the IES consultancy. The main items affected were harvesters, tractors and smaller equipment such as harvester and sprayer heads. The fall found the factories with an idle capacity between 35% and 40%, according to estimates of the Argentine Chamber of Agricultural Machinery Manufacturers (Cafma).
From March 1, payments to electricity generators in the "spot" modality will be reduced to almost half and they will be in pesos, the same currency to be used for the binational hydroelectric plants rather than dollar, according to the resolution of the Secretariat of Energy published today in the Official Gazette. With this so-called 'pesification' step, the government expects to save $300 million per year and "regulate the tariff restructuring of the energy system with a distributive, equity, and productive sustainability criteria", says the resolution.
As Argentina descends into a hellscape for creditors, investors are finding opportunities in some provincial and municipal notes selling at small discounts to their face value and spitting out rich coupons in a world of near-zero yields. Local governments owe $1.5 billion in debt obligations in 2020. "But the financial woes forcing the federal government to seek a restructuring don’t apply equally to all the country’s issuers," Oren Barack, the managing director of fixed income at New York-based AGP Alliance Global Partners says.
The Ministry of Economy on Wednesday issued Treasury letters and bonds in local currency maturing in 2020 and 2021 worth AR $9.22 billion ($148.5 million). Of that amount, AR$2.36 billion correspond to Lebad bills maturing on August 28, and another AR$6.87 billion to a swap of the dual bond AF20 for another ones in pesos with Badlar rate plus 100 basis points. Argentina has already swapped 18% of the AF20 which was due on February 13 whose capital payout was postponed to Sept. 30.
U.S. soybean futures on Wednesday extended a rebound from a sharp drop earlier this week after the Argentine Ministry of Agriculture suspended the registration of agricultural exports until further notice. The movement was seen as foreshadowing a jump from 30% to 33% in grain export tariffs that Alberto Fernández’s government might announce this weekend, thus shifting exports to the United States.
Argentina's Province of La Rioja plans to initiate talks with holders of its dollar denominated 2025s after it "faced limitations" on making a coupon payment due earlier this week. The government said in statement released on Wednesday that it would make best efforts to cover the payment inside the 30-day grace period, but it will start consulting holders on ways to achieve debt sustainability. The deal was the province's debut green bond, with proceeds slated to finance the development of the Arauco Wind Farm project and other public works.