In a joint statement, and for the first time, the three clubs of foreign debt creditors met to reject the last Argentine offer, make a counter-proposal. The legal aspects agreed upon between the country and the creditors. However, economic differences remain. The bondholders contemplate a coupon of 3.4% average and total debt relief of $ 35 billion in 9 years. The parity will be in the order of $56.5 for each bill of 100, taking an exit rate of 10%. The difference is about three dollars with the last Argentine offer of 53.5 dollars.
The province of Buenos Aires is changing its funding profile with a strategy to capture resources for specific areas: health and infrastructure programs. In the first semester, they obtained $124 million in financing lines with multilateral credit organizations. It estimates that this amount will rise to $285 million by 2020.
The Ministry of Economy closed last week with a goal fulfilled: of the $6.9 billion of dollar securities under local law that it sought to exchange for new peso instruments, it managed to convert $4.1 billion into CER-adjusted bonds maturing in 2023 and 2024. The conversion of foreign currency securities into peso debt is one of the financial strategies deployed by the Ministry of Finance that could reach $20 billion. Those investors who do not enter into the exchange driven by the law will see the payment of their maturities postponed to after December 31, 2021.
More than 272,000 employees lost their jobs between February and May of this year. The number of workers contributing to the Argentine Integrated Social Security System (SIPA) fell by almost 1.75 million in the last year. The year-on-year contraction of employment reached 5.1% in May. It estimates that the unemployment rate will exceed 15% in the second half of the year and that it will close at around 13.5% in 2020.
The Ministry of Finance intends to exchange today part of the debt in dollars under local law for CER-adjusted peso securities maturing in 2023 and 2024. It is $6.9 billion between Letes, Lelink, AF20 and TV21.
The national public sector registered during the first half of the year a primary deficit of $911,124 million equivalent to 3.3 points of GDP, reports the Congressional Budget Office (CBO). The programs that the Government had to implement to attend the health emergency derived from the COVID-19 pandemic represented 449.74 billion pesos ($6.3 bn). According to economists, the public sector deficit projects at a record of between 7 and 8 points of GDP, which would only be manageable if the Country debt front, both local and international, is closed; an agreement reached with the IMF; and an economic program is put in place to compose the activity and improve tax revenues.
The industrial activity showed a significant recovery during June and the first days of July: it went from falling 40% year-on-year between the end of March and the beginning of April to only 12% in the last 30 days, according to the index prepared by the Centre for Production Studies (CEP).
ECLAC presented its latest report indicating that Argentina will have a 10.5% fall in GDP, five points more than it had predicted in its April report. The evolution of soybean and oil prices will impact activity. The average contraction in the region expects to be 9.1% in 2020, a drop 70% higher than that estimated three months ago.
In June, capital market financing for SMEs was the most dynamic segment and the only one that grew in real terms. The negotiation of deferred payment documents grew 115% compared to the same month last year, reaching 18.6 billion pesos ($261.18 mn) which represented 34% of the total market. Small companies paid rates of 26% against 34% faced by the big ones.
More than 9,000 workers in the industry lost their jobs during April, compared to the previous month, as a result of the COVID 19 crisis, which directly impacted the productive framework and the Argentine labour market. In the year-on-year comparison with April 2019, this sector loses 46,000 jobs. In general terms, registered private wage employment, which was already in decline before the pandemic, accelerated its fall in April with a monthly loss of 128,000 jobs (2.2% per month) and an annual loss of 322,000 (5.3% year-on-year).