POPE FRANCIS: A BISHOP OF ROME WITH A HEART FOR ARGENTINA (The Bostonpilot.com)
By Andrea Gagliarducci
May 07, 2015
Vicar of Christ to the entire world, yet still a son of his homeland: Pope Francis continues to be attentive to Argentina, as shown by the news that the Vatican may open its files on the country’s military dictatorship, as well as the possible advancement of the cause of beatification of an Argentine entrepreneur.
That the Vatican would open its files on Argentina’s military dictatorships was revealed a week ago by Msgr. Guillermo Karcher, one of the Pope’s masters of ceremonies.
In an interview granted Apr. 27 to Radio America, a Buenos Aires radio station, Msgr. Karcher stressed that the Pope wishes to open up the Vatican files, and so “he has asked the Secretariat of State to take charge of it, and work has already begun on declassifying the Vatican archives related to Argentina’s dictatorship.”
During much of the 1970s, Argentina was ruled by a right-wing military government, which “disappeared” thousands of left-wing activists and militants, accusing them of communism. From 1976 to 1983, the regime disappeared as many as 30,000 Argentines, and may have murdered as many as 15,000. [new formulation to account for disparity in data] Kidnappings, torture, and other violations of human rights were rampant.
Information on these cases was collected by the Vatican, largely through the apostolic nunciature in Buenos Aires.
During the junta’s rule, numerous priests and religious were killed for their work in the poor neighborhoods of Buenos Aires, which was considered a communist act.
At that time, from 1973 to 1980, Fr. Jorge Mario Bergoglio – now Pope Francis – was the Jesuit provincial in Argentina. He used his position to create an underground network of assistance and escape for those targeted by the regime.
Msgr. Karcher added that “the work will take some time” to release the Vatican’s files, since their opening “is a challenging job, which consists in putting into order what is in the Vatican archive to allow research.”
At the moment, the files of the archive of the Secretariat of State are open until the period of the Pius XI’s pontificate (1922-1939), as the work of classification and digitalization of documents has been completed through that period.
Since his election as Bishop of Rome, Pope Francis has met several times with the Mothers of the Plaza de Mayo – a group of mothers of disappeared children – always backing their efforts to uncover information about their missing family members.
Lilita Boitano, a leader of the Mothers of the Plaza de Mayo, met with Pope Francis April 22, repeating her request that the Vatican files be opened.
In an interview with Radio del Plata, Boitano said she asked Pope Francis “if the Church could open its files on the Argentine dictatorship and eventually issue a statement of self-criticism for its behaviour under Argentina’s military dictatorship, and (the Pope) responded that they are preparing the documentation on the issue.”
Boitano then met with Msgr. Giuseppe Laterza, an official of the Secretariat of State. According to Boitano, Msgr. Laterza told her that “the collection of files is now over, and that “the files are now being scanned and digitized,” and they could be “accessible to the public within a year.”
The most important documents may be the reports of the late Cardinal Pio Laghi, who was apostolic nuncio to Argentina from 1974 to 1980.
Cardinal Laghi (then an archbishop) often met with the members of the junta, and the families of the disappeared also turned with frequency to him for help. His office maintained files on the reported disappearances.
Together with this commitment to shed light on the years of Argentina’s dictatorship, Pope Francis is also forwarding the cause for the beatification of Enrique Shaw, “a rich Argentine manager who was rich, yet saintly” as Pope Francis said in a March 13 interview with the Mexican television program Televisa.
Pope Francis started the diocesan procedure for the beatification of Shaw in 2005 when he was Archbishop of Buenos Aires, and has now received it as Pope.
Shaw was born in 1921, started his business after the Second World War, and founded in 1952 the Christian Association of Business Executives. He also was among the founders of the Catholic University of Argentina and the Christian Familiar Movement, and served as president of the Argentine Catholic Action.
In 1955, he was a victim of the anti-Catholic waves that took place in the first phase of Juan Peron’s administration. According to Navarro Floria, the postulator of the cause of beatification, even after his arrest he proved altruistic, giving other inmates the mattresses his family brought to him, as well as food.
Shaw established a pension fund and a health care system to provide the 3,400 industry’s workers medical service, financial support in case of illness, and loans for important life events such as marriage, birth, and death.
In 1961, the industry led by Shaw was sold to an American trust fund which decided to fire 1,200 people. Shaw was already suffering an advanced cancer that was to lead to his death the following year, but he strongly opposed the layoffs and proposed a recovery plan that was to retain all the workers.
Shaw’s writings were collected and sent to Rome in 2013, and approved by the Congregation for the Causes of Saints this January. The next step in the process is choosing a postulator for the ‘positio’, a comprehensive document that collects the biography and testimonies of a possible saint.
The opening of the cause of beatification was encouraged by Cardinal Jorge Mejia, a fellow Argentine who was head of the Vatican Secret Archives from 1998 to 2003.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
1. HEDGE FUNDS FREEZE BANK ACCOUNTS IN PUSH FOR ARGENTINA DEBT DEAL (Reuters News)
2. ARGENTINA RAISES MORE CASH IN LOCAL BOND SALE (Reuters News)
3. NML SAID TO FREEZE ARGENTINE ACCOUNTS AT 2 BANKS IN BELGIUM (Bloomberg News)
4. YPF PROFIT FELL AFTER ARGENTINA ORDERED GASOLINE PRICE CUTS (Bloomberg News)
5. IS ARGENTINA’S ECONOMY PULLING A TANGO TURNAROUND? (CNN)
6. ARGENTINE VEHICLE SALES, PRODUCTION, EXPORTS ALL DECLINE IN APRIL (IHS Global Insight Daily Analysis)
7. ARGENTINA’S YPF REPORTS HIGHER THAN EXPECTED NET Q1 PROFIT (Reuters News)
8. ARGENTINA’S YPF Q1 OIL PRODUCTION RISES 2.3%, GAS OUTPUT JUMPS 18% (Platts Commodity News)
9. AT HOME WITH THE WORLD IN BUENOS AIRES (The New York Times)
10. US HEDGE FUND FREEZES ARGENTINA’S EMBASSY ASSETS IN BELGIUM (PanamPost Online)
11. POPE FRANCIS: A BISHOP OF ROME WITH A HEART FOR ARGENTINA (The Bostonpilot.com)
1. HEDGE FUNDS FREEZE BANK ACCOUNTS IN PUSH FOR ARGENTINA DEBT DEAL (Reuters News)
By Hugh Bronstein
May 7, 2015
BUENOS AIRES Hedge funds suing Argentina over its defaulted debt have had some funds in the country’s Belgian diplomatic bank accounts frozen in a bid to pressure a settlement in the dispute, a move Buenos Aires described as “attempted extortion” and illegitimate.
The holdout creditors had 52,001 euros in Belgium frozen via a private justice official but without backing by a judge or a prosecutor, the Argentine Economy Ministry said.
It is the latest twist in a legal feud going back to Argentina’s record-smashing default on about $100 billion in sovereign bonds in 2002.
Argentina restructured most of that debt in 2005 and 2010, giving holders around 30 cents on the dollar, but a group of holdout hedge funds have sued in the U.S. courts for 100 cents on the dollar. The funds are scouring the world for Argentine government assets that may be seized under a U.S. federal court decision favoring their claim.
“The government of Argentina steadfastly refuses to sit down with creditors and negotiate,” NML Ltd, an affiliate of hedge fund Elliott Management, said in a statement. Elliott is the lead fund suing Argentina.
“In the absence of a negotiated settlement, our recourse includes locating and attaching Argentine assets wherever we can find them,” the statement said.
An Argentine navy ship was temporarily detained in Ghana following a court order sought by NML.
“The attempts to seize diplomatic accounts in Belgium have already failed more than once,” the Economy Ministry said. “Diplomatic goods – like the bank accounts of an embassy – enjoy specific immunity in international law.”
Argentina was “adopting the pertinent measures that the case requires for the litigants to stop their abusive conduct,” the ministry said.
Argentina was forced into default again in July last year when a U.S. judge prohibited the country from servicing its restructured bonds without striking a deal with the holdout hedge funds.
Investor sentiment has improved since then as the October presidential election approaches and hopes rise that Argentina may do more to tap its vast shale oil and other natural resources in the future. The market last month snapped up a $1.5 billion bond offer from state energy company YPF (YPFD.BA).
The next government is expected to be more market friendly than that of outgoing leader Cristina Fernandez, whose heavy currency and trade controls have weighed on the economy while inflation remains in the double digits.
2. ARGENTINA RAISES MORE CASH IN LOCAL BOND SALE (Reuters News)
By Sarah Marsh, Nicolas Misculin and Hugh Bronstein
May 7, 2015
May 7 (Reuters) – Argentina raised 5.263 billion pesos ($589.7 million) from a sale of local debt on Thursday, the economy ministry said, continuing a drive to drum up cash at home, given its fiscal deficit, upcoming debt payments and difficulty accessing global credit markets.
The ministry said it received bids worth 2.84 times the $3 billion of bonds it offered, prompting it to expand the sale. While it offered notes due in March, May and September next year, it only ended up selling the former two series.
Argentina has been largely cut off from international capital markets since its 2002 debt default.
The country restructured most of its defaulted bonds in 2005 and 2010, but a small group of hedge funds have sued in U.S. courts for 100 cents on the dollar.
Argentina refuses to pay up, but that long-running legal feud is preventing it from selling debt abroad.
The government has been seeking other ways to raise cash given that foreign reserves are now precariously low, debt payments are high this year and Latin America’s third largest economy is teetering on the brink of recession.
One alternative has been large sales of local, peso-denominated debt. In April, the country raised 4.713 billion pesos in such an auction. Another is currency-swap agreements with China.
Earlier on Thursday, a source familiar with the legal feud said holdout creditors had two government bank accounts in Belgium frozen in a bid to get the Argentina to resolve the dispute.
3. NML SAID TO FREEZE ARGENTINE ACCOUNTS AT 2 BANKS IN BELGIUM (Bloomberg News)
By Katia Porzecanski
May 7, 2015
At least two banks in Belgium froze Argentine bank accounts at the request of U.S. hedge fund NML Capital, according to a person with knowledge of the matter.
A Belgian court ordered the freeze on behalf of the investors who are seeking to enforce U.S. judgments against Argentina over its 2001 default on $95 billion of debt, according to the person who asked not to be identified because the order hasn’t been made public.
There is no evidence at this time that the bank accounts belong to the Argentine embassy in Brussels, as reported earlier by newspaper La Nacion, the person said.
NML, a unit of billionaire Paul Singer’s Elliott Management, refused restructuring offers from Argentina that imposed losses of 70 percent, which had been accepted by holders of about 92 percent of the repudiated debt. NML sued for full repayment and won $1.7 billion in judgments, which Argentina refuses to pay.
In June, the U.S. Supreme Court left intact court orders that blocked the South American nation from paying interest to holders of restructured debt until NML and other creditors are paid.
Creditor Efforts
“In the absence of a negotiated settlement, our recourse includes locating and attaching Argentine assets wherever we can find them,” NML said in a statement. “Argentina should not be surprised that its refusal to negotiate results in efforts by creditors to pursue their rights in court.”
Argentina’s Finance Ministry said in an e-mailed statement that hedge funds are trying to seize assets in Belgium and that Argentina’s government has not been notified by Belgium’s Foreign Ministry or justice system about 52,000 euros ($58,000) frozen by judicial officials. The ministry also said Argentina is taking steps to stop litigants from “abusive conduct.”
A U.S. appeals court ruled in December that Argentina, and entities tied to it, must give NML and other creditors details of the country’s global assets, including diplomatic and military holdings.
The decision implies that entities which aren’t alter egos of Argentina and aren’t liable for its debts may still have to reveal their assets to creditors. The subpoenas seek asset information from hundreds of state-related entities with accounts or operations outside Argentina.
4. YPF PROFIT FELL AFTER ARGENTINA ORDERED GASOLINE PRICE CUTS (Bloomberg News)
By Pablo Rosendo Gonzalez
May 7, 2015
YPF SA, Argentina’s largest company, said first-quarter profit fell by 26 percent after the government decided to cut gasoline prices to relieve consumers amid a global energy slump.
Net income slid in the quarter to 2.1 billion pesos ($238.4 million), or 5.42 pesos a share, from 2.88 billion pesos, or 7.3 pesos, a year earlier, the Buenos Aires-based oil producer said in a statement to Argentina’s regulator Thursday. Excluding one-time items, per-share profit missed the 5.56-peso average forecast of five analysts surveyed by Bloomberg.
While other oil companies including BP Plc and Royal Dutch Shell Plc have announced spending cuts of more than $40 billion, Argentina’s state-run producer has said it plans to keep its $6 billion annual capital budget target intact and maintain its workforce. The state-controlled company, which was nationalized in 2012, is mainly investing in the Vaca Muerta shale formation in southern Argentina.
In December, with Brent crude prices down about 50 percent from a June high, the Argentine government set the fourth-quarter price of Medanito light oil at $83.90 a barrel and Escalante heavy at $74. The domestic price has protected YPF and other producers from the huge declines that prompted cost cutting by major oil companies elsewhere.
At the same time, the government ordered companies to cut prices at the pump by 5 percent. YPF has about 60 percent of the retail gasoline market.
Bond Sales
To fund spending, YPF increased its debt by 15.5 percent including a $500 million sale of bonds in February. The company sold another $1.5 billion of bonds in the international market last month. The average cost of its debt in dollars was 7.1 percent in the quarter and 23 percent in pesos.
Crude oil output rose 2.3 percent while natural gas production jumped 18 percent in the quarter, the company said. Sales rose 13.2 percent to 34.7 billion pesos while investment fell 23 percent to 12.4 billion pesos. Costs increased by 13.3 percent compared with the same period in 2014.
In the downstream sector, sales increased by 7.8 percent to 31.9 billion pesos, trailing the government’s 16.5 percent annual inflation rate in the period. Private analysts estimate prices actually rose about 25 percent.
“Petrochemicals product sales reported less income in the local market due to a decrease in volume and cheaper prices in pesos,” YPF said.
The earnings report was released after the close of regular trading in Argentina. YPF’s American depositary receipts fell 2 percent to $30.28 in New York. The ADRs have gained 14.4 percent year to date.
5. IS ARGENTINA’S ECONOMY PULLING A TANGO TURNAROUND? (CNN)
By Patrick Gillespie, CNN
Fri, May 8, 2015
New York (CNN) — Argentina evokes images of tango, soccer, gauchos…and an awful economy — one of the world’s worst.
Its economy is projected to show little or negative growth in 2015. Argentina is still indebted to American hedge funds, affectionately known as “vultures” in the country. And it remains the poster child of nations that default on their loans.
But there’s new optimism in Argentina, mainly driven by presidential elections coming later this year.
Its stock market is rallying and investors are buying the countries’ debt (amazing news, considering the country is mired in recession and another default.)
“The economy seems to not be falling anymore,” says Eugenio Aleman, an Argentine and senior economist at Wells Fargo Securities. “There are a little bit more positive vibes going around.”
Elections drive economic hope: Lionel Bollini has noticed the better vibes. He owns La Dama de Bollini, a historic bar in Buenos Aires where Argentina’s most famous writer, Jorge Luis Borges, once mingled with friends.
Rising taxes and inflation are tough on small business owners, but overall Argentina is starting to move in the right direction, Bollini says. More tourists are visiting his bar now than in past years.
“The economy is still struggling, but it’s a little more practical, more honest to me,” says Bollini, 47. “Things are improving.”
Argentina’s Merval stock market is up 45% this year, more than Europe’s stellar performance and way more than the S&P 500.
Even everyday Argentines, battered by rising food prices and electric bills, are feeling better lately. The country’s consumer confidence index is up over 40% from a year ago, according to Torcuato di Tella University, a private university in Buenos Aires.
The presidential elections in October are driving hope that any administration could improve the country’s economy more than President Cristina Fernandez de Kirchner and economic minister Axel Kicillof.
Kicillof, a frequent tweeter with Elvis-style sideburns and a distaste for ties, announced recently that Argentina sold $1.4 billion in government debt.
That’s a healthy sign for a country that’s riddled with inflation and a currency losing value. Argentina paid a hefty price for the debt sale, offering a much higher interest rate on its dollar-denominated bonds than other Latin American countries.
“$1.4 billion won’t solve all the [debt] payments, but it’s better than nothing,” says Daniel Artana, senior economist at the Foundation of Latin American Economic Investigations (FIEL) in Buenos Aires. “You can have some short-term, small economic recovery.”
But the steak and wine party basically stops there.
The ‘vulture’ problem: Argentina’s major problem stems from its $95 billion default in 2001, the largest by any country in history.
“I remember, it was chaos,” says Bollini, the bar owner. Compared to 2001: “Everything is better now. [Last year’s default] wasn’t the same.”
American hedge funds, led by billionaire Paul Singer and his fund NML Capital, bought the country’s defaulted debt for very little money after the default.
Now they want to be repaid in full for $1.5 billion. A New York judge, Thomas Griesa, agrees with the hedge funds and has ordered Argentina to pay. It’s important to note that NML is in a small minority seeking full repayment. The majority of Argentina’s creditors already accepted a steep discount.
In July, Griesa stopped Argentina from making a debt payment to its non-holdout creditors before it settled with the holdouts, which eventually forced Argentina into default.
Argentina and the hedge funds still say they are willing to negotiate. But NML invited Argentina to reopen talks again in January after a key clause in the bond contract — the main reason Argentina refused to pay them — had expired. Argentina never replied to the invitation, according to the case’s mediator, Daniel Pollack.
More ugly problems: Because Argentina refuses to pay the holdouts, it cannot access foreign investment. That’s a huge problem. A massive oil field in Argentina sits untouched because the country doesn’t have the money to drill.
Experts say the only way for Argentina to get investment from abroad is to settle with the holdouts.
It gets worse. Argentina’s economy relies on commodities like oil and soybeans. Prices for those two have tanked in the past year, though they’ve recently stabilized.
Add on that the country’s two key trade partners — Russia and China — have slowed down this year, and it’s easy to see a rocky road ahead for Argentina.
Still, the promise of a new president is bringing hope to Argentina.
“Everything is going well because there’s an end in sight and in December everybody can sing the ‘Wicked Witch is Dead,'” says Russ Dallen, managing partner at Caracas Capital Markets.
6. ARGENTINE VEHICLE SALES, PRODUCTION, EXPORTS ALL DECLINE IN APRIL (IHS Global Insight Daily Analysis)
By Stephanie Brinley
7 May 2015
After increasing in March, Argentina’s vehicle sales fell 9.7% year on year (y/y) in April, exports dropped 34.6% y/y, and production declined 21.2% y/y.
IHS Automotive perspective
Significance
In the year to date (ytd), Argentine vehicle sales were down 12.5% (177,341 units) in April; April’s vehicle sales were down 9.7% year on year (y/y), including the light and medium-heavy sectors. Argentina continued to see production decline, down 10.9%, to 46,618 units in April. Though March’s exports were flat compared with a year earlier, there was a 34.6% y/y drop in April’s exports. Production in the ytd declined 17.6% and exports by 23.6% in April.
Implications
Argentina continues to be impacted by the devaluing currency and higher vehicles taxes. While those taxes were adjusted for 2015, we believe they will still have a major effect on demand this year.
Outlook
Argentina’s uncertainty includes currency devaluation, with the effects lasting beyond the short term, and we forecast it will hinder sales through 2016. IHS’s expectation remains unchanged that the market will continue a downward trajectory towards sales of 475,541 light vehicles in 2015, a decline of 27.0%.
Argentina’s sales of light- and heavy-duty vehicles decreased 6.8% in April, compared with the same month of 2014, while there were also sharp declines in exports and production, according to latest data from the country’s Association of Automobile Manufacturers (Asociación de Fábricas de Automotores: ADEFA). In the first four months of 2015, sales were down by 12.5% y/y, production by 17.6% y/y, and exports by 23.6%.
The ongoing effects of the Argentine peso’s depreciation and an unstable economic and political situation, however, are keeping the market back. Wholesale vehicle shipments reached 46,363 units in April, a 9.7% year-on-year (y/y) decline, including medium and heavy commercial vehicles. While month-on-month (m/m) results in March showed dramatic increases over February’s figures, partly explained by holidays, the m/m comparison from March to April returned a 12.2% decline. Looking at light-vehicle sales only, which accounted for 43,279 units of April’s total sales, passenger-car sales were 32,353 units, or 69.7% of light-vehicle sales.
At the time of writing, manufacturer-level sales results for April are not available. Over the first three months of 2015, Volkswagen (VW) managed a 62.9% y/y increase in sales, selling 29,734 units and taking the market lead from Ford. Ford sold 19,672 units, a 20.5% decline, in the first quarter. FCA (15,945 units, down 35.5%) was in third position in terms of sales, narrowly ahead of PSA (15,584 units, down 34.2%). General Motors (GM; 15,007 units, down 8.5%) fell to fifth position, with fewer than 1,000 units separating third and fifth positions. Toyota was behind GM, selling 14,539 units between January and March, a 1.5% decline. Renault slipped to seventh position, having sold only 10,435 units in the first quarter, a 48.5% decline. In the month of March, VW led the market with 12,345 units sold, followed by GM (7,510 units), Toyota (7,129 units), FCA (6,112 units), and Ford (5,993 units).
Argentina’s total vehicle production, sales, and exports*
April 2015 April 2014 Change, % YTD2015 YTD 2014 Change, %
Production 46,618 59,165 -21.2 170,164 206,581 -17.6
Exports 21,232 32,479 -34.6 81,634 106,827 -23.6
Sales 42,363 51,346 -9.7 177,341 202,652 -12.5
*Includes light- and heavy-duty vehicles, due to ADEFA volume reporting limitations. For more accurate light-vehicle comparisons, see IHS Automotive’s Argentine Monthly Market Report.
Export volumes continued to be affected by trade issues and weak demand in Brazil, Argentina’s major trading partner. After returning a decline of less than 1% in March, exports fell 34.6% y/y in April and were down 23.6% y/y in the year to date (ytd). Although a new trade agreement between Argentina and Brazil came into effect in July 2014 and will last until July 2015, the constraints of a weak market in Brazil continue to keep exports back. In March, Argentina also extended its quota-based agreement with Mexico through 2019; the agreement caps trade at USD575 million. In April, 78.1% of Argentina’s vehicle exports went to Brazil, though ytd exports from Argentina to Brazil were down 31,488 units. Exports to Brazil were 77.5% of export volumes in March, compared with 75.6% in February 2015, and 88.3% in March 2014.
Production in the first quarter was impacted by extended plant shutdowns for holidays and adjustment of production lines for model changeovers, with a poor market slowing production in April as well, and it was down 17.6% in the first four months; in March, production dropped 10.3%. Production of light vehicles in April reached 46,618 units, and 170,164 units were built in the first four months of the year, a decline of 17.6% y/y. Production of heavy vehicles fell 64.1% y/y between January and April, to 2,341 units.
Outlook and implications
Vehicle sales in Argentina fell by double digits every month in 2014, with many months seeing declines exceeding 40%. April’s results did not carry on the gain in overall sales of March, and light-vehicle sales were down 12.5% y/y in the ytd period. As the Argentine vehicle market continues to face headwinds, IHS Automotive forecasts sales in 2015 will see another decline, of 26.7%, to 475,541 units. The Argentine peso’s exchange rate of ARS8.5:US1.0 strains consumers by making cars even more expensive. The effects of depreciation will last beyond the short term and will likely prevent sales growth until 2017.
ADEFA president Isela Costantini said that work in 2015 should be oriented to the continuous improvement of competitiveness and certainty of availability of foreign exchange to ensure a higher level of activity, supplier development, and greater international integration, particularly with Brazil and Mexico. However, ADEFA declined to project total sales for 2015. Investment also continues in the country’s vehicle industry, including Fiat’s plans for a new sedan to be built in the Argentina (see Argentina: 1 May 2015: ), as well as Nissan investing to add Argentine production of a pick-up for Nissan and for Mercedes-Benz (see Argentina: 10 April 2015: and Germany – Japan – France: 9 April 2015: ).
A revision to Argentina’s taxation scheme raised the minimum cap by 15% for any vehicle sales between 1 January 2015 and 30 June 2015. The 30% tax level is now for vehicles priced between ARS195,500 and ARS241,500, before the tax; vehicles below the threshold are taxed at 10%. The 50% tax level is now for vehicles that cost more than ARS241,500 before taxes. However, regional media reports are sceptical that the program will work and cite automakers’ concerns that prices of vehicles will simply increase to just below the taxation level; in particular, the vice-president of Hyundai Motor Argentina has said that if the tax cannot be repealed, a better solution would be a lower rate applied to a more progressive price point.
The first iteration levied higher taxes on vehicles priced over ARS170,000 (USD25,000) to control imports. An additional 30% is levied on vehicles costing ARS170,000–210,000 and 50% on vehicles priced above ARS210,000. This will continue to impact the C, D, and E segments, though pick-up trucks are exempt.
Although a trade agreement has been settled between Brazil and Argentina and is set to last through July 2015, it has not increased exports to Brazil, evidenced by a declining share of vehicles exported to that country in combination with the overall export declines, in part because the Brazilian market is also struggling. The temporary resolution is against a backdrop of sales declining in both markets and this could slow the positive impact of the resumed trade. Argentina renewed its quota arrangement with Mexico in March, as did Brazil; Argentina’s trade with Mexico is capped at USD575 million per year through 2019.
Argentina’s medium- and long-term outlook for light-vehicle demand is complicated by the country’s political situation, which has turned from stable to unsettled. Economically, increasing exports of soy to China provide a driver for medium- to long-term growth. The biggest risk comes from the political sphere, with the government choosing not to face up to tepid inflation, creating uncertainty with regard to the vehicle market outlook. The country’s currency has also been depreciating continually, which makes imported cars more expensive. As imports make up 60% of the Argentine vehicle market, this hurts vehicle demand. Vehicle prices went up an average of 60% for cars priced above ARS210,000. The downward market spiral that began in 2014 is spilling over into 2015, as we expect sales to fall by another 175,000 units. A quick recovery is unlikely and we do not see growth reigniting in the market until 2017.
7. ARGENTINA’S YPF REPORTS HIGHER THAN EXPECTED NET Q1 PROFIT (Reuters News)
7 May 2015
BUENOS AIRES, May 7 (Reuters) – Argentina’s state energy company YPF posted better than expected first-quarter profit on Thursday but earnings were still down 24.3 percent on the year due to the global slide in oil prices.
YPF posted profit of 2.109 billion pesos ($239 million) in the January to March period, beating the consensus forecast in a Reuters poll of economists that was for profit of 1.5 billion pesos. However, this was significantly below the 2.787 billion pesos achieved in the same period last year.
“During this period, the price in international crude halved, a situation that directly impacted the results of the major companies in the sector,” YPF said in a statement.
Oil output at YPF, which was nationalized in 2012, rose 2.3 percent in the quarter, while natural gas production climbed 18 percent, the company said in its earnings statement.
Shale oil and gas output from 332 wells in the vast but barely tapped Vaca Muerta formation was 41,700 barrels per day equivalent, YPF said.
Argentina nationalized YPF in 2012 after accusing its former parent, Spain’s Repsol SA, of under-investing and thereby generating a costly energy deficit for Latin America’s No. 3 economy.
The country hopes that by hiking investments in Vaca Muerta, viewed as one of the biggest shale reserves in the Western Hemisphere, it will be able to reduce energy imports that are draining its low foreign reserves.
YPF raised $1.5 billion in a bond sale last month.
“Investments in the first quarter of 2015 reached 12.351 billion pesos, a level that has enabled us to maintain activity and growth in production in a global context that is unfavorable for this industry,” YPF said.
($1=8.8225 Argentine pesos at the end of March)
8. ARGENTINA’S YPF Q1 OIL PRODUCTION RISES 2.3%, GAS OUTPUT JUMPS 18% (Platts Commodity News)
By Charles Newbery
7 May 2015
Buenos Aires (Platts)–7May2015/715 pm EDT/2315 GMT Argentina’s YPF said Thursday its first-quarter oil and natural gas production rose 2.3% and 18%, respectively, from the same period a year ago, as the state-run energy company ramped up investment to wring more out of conventional reserves and develop unconventional resources.
Q1 crude oil production rose to 247,200 barrels/day from 241,600 b/d in Q1 2014, while gas output jumped to 43.9 million cubic meters/d from 37.2 million cu m/d, the company said.
Its total Q1 hydrocarbon output rose 10.2% to 583,800 barrels of oil equivalent from 529,700 boe/d a year earlier, an earnings statement said.
The 2014 acquisition of the Argentina assets of US-based Apache, which averaged 43,300 boe/d of production in Q1 2015, helped the increase, YPF said.
Q1 production of natural gas liquids rose 12% to 60,500 b/d from 54,000 b/d in the same quarter a year ago, it added.
YPF said its Q1 capital expenditures fell 23.2% to 12.4 billion pesos ($1.4 billion)from 16.1 billion pesos a year earlier. But the amount was enough to “maintain activity and growth in production in global context unfavorable for the industry.”
The company said its investment in exploration and production rose 24.4%, excluding acquisitions, in the first quarter from a year ago. The spending focused on exploration, with 12 exploratory wells completed. Another three workover wells were completed in the period, it added.
YPF said the increase in hydrocarbon production came largely from its operations in Neuquen, a southwestern basin with huge potential for unconventional oil and gas, in particular in the giant Vaca Muerta play.
So far, YPF is the only company to put Vaca Muerta into mass production, working in a 50:50 partnership, with Chevron, on the Loma Campana block. Q1 production there averaged 41,700 boe/d, up from 35,000 boe/d in Q4 2014. Of the Q1 shale production, 20,500 b/d was crude, 9,400 b/d was NGLs and 1.93 million cu m/d was gas, YPF said.
The company said that in Q1 49 wells were put into production at Loma Campana and one for natural gas at La Ribera, all targeting Vaca Muerta and bringing the number of development wells there to 332, it added.
YPF said it also is developing tight gas from the Lajas play, also in the Neuquen Basin. It drilled 10 wells with partners there in Q1 2015, taking production to 4.3 million cu m/d. YPF said it also produced 1 million cu m/d of tight gas from the nearby Mulichinco play in the same period.
YPF added it has continued to recover conventional oil production at the Malargue area after a March 2014 fire at a crude treatment plant slowed activities. Output at the block has recovered to 7,700 b/d, or 1,500 b/d shy of pre-fire levels, YPF said.
Crude oil prices rose 3.4% to $68.8/barrel in Q1 compared with $66.5/b the same period a year ago, but fell from $76.4/b in Q4 2014. Meanwhile, Q1 gas prices rose 4.7% to $4.60/MMBtu from $4.40/MMBtu a year ago, and were up from $4.42/MMBtu in Q4, YPF said.
DOWNSTREAM: GASOLINE SALES RISE 1.4%, DIESEL FALLS 0.7%
Downstream business, YPF said gasoline sales rose 1.4% in volume and diesel fell by 0.7% in Q1 compared with a year ago. Fuel oil sales rose 18.5% in traded volumes over the same period, YPF said.
Higher local prices of these products, and more demand for premium goods, pushed up sales revenue, it added.
Domestic diesel and gasoline prices rose 1.6% and 5.8%, respectively, in Q1 year on year, it said.
The rate of capacity use of its refineries rose to 94% in Q1 from 86% in Q1 2014, helped by a recovery in the utilization capacity of its 189,000 b/d La Plata refinery, which had been damaged by a fire and flooding in 2013.
YPF said it ran 300,000 b/d of crude through its refineries in Q1, up 9.1% from 275,000 b/d in Q1 2014.
But revenue from exports of jet fuel, liquid petroleum gas and petrochemical products dropped on lower global prices, YPF said.
YPF produces 42% of Argentina’s 530,000 b/d of crude and 30% of its 114 million cu m/d of gas, according to the Argentine Oil and Gas Institute, an industry group. It also has a 55% share of diesel and gasoline sales.
9. AT HOME WITH THE WORLD IN BUENOS AIRES (The New York Times)
By Suchi Rudra
8 May 2015
BUENOS AIRES — Walking through the circular layout of Frank Ansel’s home is akin to a leisurely museum stroll. But this tour of mostly Asian antiques and paintings takes place on the top floor of a seven-story building from the late 1920s in the affluent Recoleta neighborhood of Buenos Aires.
Purchased in late 2008 for the equivalent of $610,000, the 176-square-meter, or 1,894-square-foot, French-style apartment is a calm space, filled wit