1. ARGENTINA RESUMES TALKS WITH HOLDOUT CREDITORS AFTER LOAN AGREED (Financial Times)
2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; THE COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)
3. PRESS RELEASE: STATEMENT OF DANIEL A. POLLACK, SPECIAL MASTER IN ARGENTINA DEBT LITIGATION, FEB. 1, 2016 (Dow Jones Institutional News)
4. CHILE TO EXPORT GAS, ELECTRICITY TO ARGENTINA (Business News Americas)
5. ARGENTINA TO SUBSIDIZE OIL EXPORTS TO SUSTAIN OUTPUT, JOBS (Platts Commodity News)
6. ARGENTINA’S LNG IMPORTS COULD SEE 20% DECLINE IN 2016 WINTER SEASON (Platts Commodity News)
7. ARGENTINA INFESTED WITH SWARMS OF LOCUSTS (ABC News)
1. ARGENTINA RESUMES TALKS WITH HOLDOUT CREDITORS AFTER LOAN AGREED (Financial Times)
By Benedict Mander
2 February 2016
Argentina resumed debt talks with a group of US hedge funds yesterday after securing a $5bn loan from Wall Street banks last week that will strengthen its hand in negotiations to end a decade-long legal dispute.
In a meeting in New York, finance secretary Luis Caputo, a former JPMorgan executive, was due to present an offer to the so-called holdout creditors , who rejected restructuring deals after Argentina’s 2001 default and won a legal victory in the US in 2012 that ruled that they should be repaid in full.
The bridge loan to Argentina’s central bank, which confirmed on Friday that foreign exchange reserves had jumped to more than $30bn, is another sign of investor confidence in the new market-friendly government of Mauricio Macri. HSBC, JPMorgan and Santander contributed $1bn each, while Deutsche Bank, BBVA, Citibank and UBS all lent $500m at an interest rate of about 6 points above the Libor rate.
The dispute with the holdouts is preventing Argentina’s return to the international capital markets. Reaching an agreement with the creditors led by US billionaire Paul Singer’s Elliott Management would put an end to Argentina’s second default this century in 2014, when the holdouts’ legal victory in the US prevented Argentina from continuing to service debt to holders of restructured debt.
An agreement could lead to upgrades by credit rating agencies and Argentina’s inclusion in emerging market bond indices. JPMorgan last week removed South America’s second-largest economy from its “frontier” market index.
“The most important credit constraint for Argentina remains its unresolved default resulting from the ongoing legal proceedings in the US. A resolution of the legal proceedings with holdout investors that would allow Argentina to freely access international capital markets would be a strong credit positive for the country,” said Gabriel Torres, a senior sovereign analyst at Moody’s, the credit rating agency.
Mr Macri, who attracted huge interest from investors at the World Economic Forum in Davos last month, has made solving the legal dispute a central part of his economic reforms, which included a 30 per cent devaluation in the overvalued peso in December after lifting strict capital controls in place since 2011.
Last week, the centre-right government also began removing costly electricity subsidies , with prices for consumers set to multiply by more than six times.
The previous populist government of Cristina Fernández de Kirchner presided over some of the cheapest electricity prices in the world, pushing the fiscal deficit last year to almost 8 per cent of gross domestic product.
Nearly 3 per cent of GDP has been ploughed into subsidising domestic energy consumption, with electricity bills for many households costing as little as $3 a month.
Any agreement with the holdouts will then have to be approved by the opposition-dominated congress, with delicate negotiations with the divided Peronist movement expected to follow. Despite his tough economic reform programme, Mr Macri, who was previously mayor of the city of Buenos Aires, enjoys approval ratings of 71 per cent after his first month in office, according to Poliarquia, a local pollster.
The holdouts’ own bonds had a face value of about $6bn in 2001, but accumulated interest means that the value of Argentina’s holdout claims is now estimated to be more than $20bn.
2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; THE COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)
By Taos Turner
2 February 2016
BUENOS AIRES—Argentina faces $9 billion in claims from holdout creditors entangled in a legal battle against the country in the U.S., a court-appointed meditator said late Monday.
The estimate, which comes from Daniel Pollack, a New York-based attorney who is trying to help the parties resolve a dispute, is almost a $1 billion less than Argentina had previously acknowledged.
Mr. Pollack said Argentine officials, including Finance Secretary Luis Caputo, met in his office for four hours with holdouts including Elliot Management Corp, Aurelius Capital Management LP, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner.
“Ideas were discussed, informally, for the resolution of the claims, which now total approximately $9 billion,” Mr. Pollack said. “No agreement has been reached as yet. No specific date or time has been set for resumption of negotiations but it is possible that they will continue this week.”
Earlier in the day, Argentina said it planned to make an offer to the holdouts this week and that it wanted the creditors to agree to reduce the amount of punitory interest applied to the debt owed to them.
The dispute stems from Argentina’s decade-old refusal to offer full payment on bonds that the holdouts bought after the country defaulted on them in 2001.
Argentina’s president, Mauricio Macri, is eager to end the conflict because it is preventing the country from borrowing money abroad and raising financing costs for both the public and private sectors.
3. PRESS RELEASE: STATEMENT OF DANIEL A. POLLACK, SPECIAL MASTER IN ARGENTINA DEBT LITIGATION, FEB. 1, 2016 (Dow Jones Institutional News)
1 February 2016
NEW YORK, Feb. 1, 2016 /PRNewswire/ — Daniel A. Pollack, Special Master presiding over settlement negotiations between the Republic of Argentina and its Bondholders, issued the following statement tonight:
“Negotiations between the Republic of Argentina and its major ‘holdout’ Bondholders were held in my offices today. In attendance for the Republic of Argentina were the Secretary of Finance, Luis Caputo; the Vice Chief of the Cabinet, Mario Quintana; and the Undersecretary of Finance, Santiago Bausili. In attendance as ‘holdout’ Bondholders were principals of Elliott Management, Aurelius Capital, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner. The meeting commenced at 1:00 pm and concluded at approximately 5:00 pm. Ideas were discussed, informally, for the resolution of the claims, which now total approximately $9 billion. No agreement has been reached as yet. No specific date or time has been set for resumption of negotiations but it is possible that they will continue this week. In my capacity as Special Master I will continue to meet with the parties, individually, and, possibly, together, in an attempt to help them reach agreement. No further statement will be issued tonight.”
4. CHILE TO EXPORT GAS, ELECTRICITY TO ARGENTINA (Business News Americas)
1 February 2016
Chile will begin exporting 5Mm3/d of natural gas to neighboring Argentina under an arrangement lasting from May-September of this year.
The deal is meant to ensure gas supplies for Argentina during the South American winter, Chile’s energy minister Máximo Pacheco told local paper La Tercera.
The gas will come from the Mejillones LNG import terminal in Chile’s northern Antofagasta region (II) and the Quintero LNG terminal (pictured) in central Valparaíso region (V).
Mejillones gas supplies will be dispatched via the existing Norandino pipeline, while gas from Quintero will be shipped through the GasAtacama pipeline.
Chilean national oil company Enap, which is a part-owner of Quintero, will export the gas to Argentine state energy company Enarsa.
BACKGROUND
It was through these same two pipelines that Argentina formerly exported gas to Chile.
Argentina was Chile’s main provider of natural gas until 2007, when Argentina abruptly cut off supplies amid declining domestic production and rising demand.
Now, despite possessing the world’s second-largest recoverable shale gas resources, Argentina must import piped gas from Bolivia and LNG from global suppliers in order to keep up with local demand.
Industrial consumers in Argentina have reportedly been forced to ration gas consumption during the winter months, in order to ensure gas supply for homes.
Imports from Chile under the new agreement equal roughly 20% of Argentina’s current LNG imports, and about 40% of consumption in Buenos Aires province, Pacheco said.
The export deal will inject US$180mn annually into the Chilean economy, according to Pacheco.
ELECTRICITY
Chile will also begin exporting electricity in the coming months via an existing cross-border transmission line owned by Chilean energy firm AES Gener.
Chilean authorities will allow the export of up to 200MW of electricity, Pacheco said, although the connection has a capacity of 600MW.
Argentina has been forced to rely on imported electricity from Uruguay and Brazil in recent weeks amid surging summer temperatures.
5. ARGENTINA TO SUBSIDIZE OIL EXPORTS TO SUSTAIN OUTPUT, JOBS (Platts Commodity News)
By Charles Newbery
1 February 2016
Buenos Aires (Platts)–1Feb2016/909 pm EST/209 GMT Argentina’s government agreed Monday to subsidize oil exports to sustain production in the southern province of Chubut, as low crude prices threaten to sideline rigs and slash 5,000 jobs.
“We’ve reached a satisfactory agreement,” Jorge Avila, general secretary of the Union of Private Oil Workers in Chubut, said in televised comments after meeting with national and provincial authorities and oil company representatives in Buenos Aires.
The national and provincial governments “vowed to pay a $10/b subsidy,” he said.
Of this, the national government will handle $7.50/b and Chubut the remainder, he added.
The meeting came after nearly two weeks of talks on how to sustain oil production in Chubut, which accounts for about 30% of the country’s 532,000 b/d of crude output. A plunge in global oil prices to less than $32/b has pushed export prices in Chubut to as low as $20/b, according to union data.
Faced with shrinking profits and even losses, oil companies in the province like state-run YPF, BP-controlled Pan American Energy, Chile’s Sipetrol and Argentina’s Tecpetrol said they would have to lay off workers.
Avila’s union has estimated that the job losses could reach 5,000.
Now with the agreement, the companies will maintain production and jobs for six months while a longer-term solution is found, Chubut Governor Mario Das Neves said on television after the meeting.
“We are going to follow this issue closely,” he said.
With the six-month truce, the union will call off plans for a strike that could have interrupted oil and natural gas deliveries.
Argentina had been subsidizing oil exports at $3/b in 2015, but the new government of Mauricio Macri did not renew the scheme after taking office in December.
Instead, his government cut domestic prices by 10% to $54.90/b for heavy crude — such as what is produced in Chubut and Santa Cruz — and to $67.50/b for light crude, thanks to a pricing agreement with refiners and the government aimed at sustaining production. Refiners, in turn, increased product prices by 6% in January and will do by another 6% in March.
Argentina is trying to rebuild oil production after a 20% decline over the past decade, while also sustaining output at refineries to meet demand.
6. ARGENTINA’S LNG IMPORTS COULD SEE 20% DECLINE IN 2016 WINTER SEASON (Platts Commodity News)
By J. Robinson
1 February 2016
Houston (Platts)–1Feb2016/256 pm EST/1956 GMT Argentina’s imports of LNG could decline by 20% or more in the 2016 winter season compared with last year, as the result of a recently announced agreement to import natural gas from neighboring Chile, local media in both countries reported Monday.
From May through September, Chile will export 5.5 million cu m/day of gas to Argentina under the accord reached Saturday.
Gas to be exported from Chile will be sourced on the global LNG market — mostly likely from Asian suppliers, according to local media reports — and delivered to both of the country’s import terminals, GNL Mejillones in the north and GNL Quintero in central Chile.
The gas will be delivered to Argentina via existing pipelines that cross the international border in the Argentinian provinces of Salta in the north and Mendoza in central Argentina.
In the 2015 winter season, running from May to September, Argentina imported the LNG equivalent of 3.8 Bcm of gas, according to data from Platts Analytics.
Assuming gas demand remains stable this year, imports from Chile, which would total roughly 836 million cu m, would cut Argentina’s LNG demand by upwards of 22% during the winter months.
While the gas import/export agreement reached between Argentina’s energy minister, Juan Jose Aranguren, and Chilean counterpart Maximo Pacheco made headlines Monday, the countries also agreed on additional plans to further energy-related cooperation.
The two nations agreed to expand bilateral oil and gas exploration and development activities in the southern region of Patagonia, and will seek out new ways improve the integration of their electricity grids.
In 2004, Argentina’s exports of natural gas to Chile were halted as a result of declining national production. Over the last decade, Argentina’s gas output has fallen by approximately 20%, making it a net importer of natural gas.
Argentina produces around 117 million cu m/d of gas while consuming an average 130 million cu m/d. The national deficit is bridged through pipeline imports from Bolivia and LNG imports to the country’s two terminals — Escobar in the north of Buenos Aires province and Bahia Blanca in the south.
7. ARGENTINA INFESTED WITH SWARMS OF LOCUSTS (ABC News)
By Stevie Borrello
Feb 1, 2016
The recent images and videos of locusts swarming farms and villages in Argentina are not part of a Hollywood movie. These images are very much real.
Thousands of locusts are infesting farmlands in Catamarca, Santiago del Estero, Tucuman and Córdoba. The locusts first arrived in Argentina in Santiago del Estero last July. This video shows thousands of locusts swarming across a field. Other videos show locusts covering trees and exteriors of buildings.
“The last government didn’t care about this situation. This is changing with the new government,” Juan Pablo Karnatz, a member of the Board of Rural Confederations of Argentina, wrote in an email to ABC News.
This is the worst locust attack in the country in over 50 years, according to the Rural Confederations of Argentina. There are currently more than 100 outbreaks in Argentina that have affected more than 700,000 hectares of land.
Government officials in Argentina have been grappling with how to control the infestation. SENASA, the government agricultural inspection agency, has created a hotline for people to call if they spot any locusts.
If locusts are not fumigated before they mature, “they can become millions and eat all the production of the farms. They eat all they can get,” Karnatz wrote.
Karnatz believes the plague can come under control this year “but not eliminated.”
SENASA official Rafael Rodríguez Prados said in a statement on Jan. 7 (translated from Spanish), “We know that the locust is a voracious pest that threatens crops, pastures and natural forests and we understand that control is a task that involves us all. That’s why we invited provincial institutions, municipal, communal and producers to participate in this meeting to define coordinated actions necessary for success against the scourge.”
There are also warnings of locust outbreaks in northwest Africa, the Horn of Africa and Yemen, according to a press release from the United Nations. The heavy rains from El Nino and tropical cyclones Chapala and Megh could potentially cause two generations of breeding to occur in those areas if the heavy rains continue this year.
Wednesday
1. AFTER 14 YEARS AT ODDS, ARGENTINA AIMS TO SETTLE DEBT WITH HEDGE FUNDS (The New York Times)
2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)
3. ARGENTINA TO PAY ITALIAN ‘HOLDOUT’ CREDITORS (Financial Times (FT.Com))
4. ARGENTINA SETTLES FIRST OF $9 BIL IN DEBT DEFAULT CLAIMS (Barron’s Blog)
5. ARGENTINA REACHES CASH DEAL WITH ITALIAN CREDITORS OVER DEFAULTED DEBT (Reuters News)
6. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (Reuters News)
7. ARGENTINE PRESIDENT’S NEW SECURITY AGENDA LIKELY TO PROVOKE TERRITORIAL COMPETITION BETWEEN DRUG GANGS, RAISING VIOLENT CRIME RISKS (IHS Global Insight Daily Analysis)
8. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (The New York Times)
10. ARGENTINA: WHY THIS TIME MAY BE DIFFERENT (Seeking Alpha.com)
11. UNITED ARAB EMIRATES STRENGTHENS TIES WITH ARGENTINA’S NEW GOVERNMENT (Inter Press Service)
12. GEVO ENTERS JOINT VENTURE TO DEVELOP BIOFUELS PLANTS IN ARGENTINA (The Denver Post)
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1. AFTER 14 YEARS AT ODDS, ARGENTINA AIMS TO SETTLE DEBT WITH HEDGE FUNDS (The New York Times)
By Alexandra Stevenson
3 February 2016
After a bitter face-off for more than a decade between Argentina and a group of disgruntled New York hedge funds, both sides have come to the negotiating table with fresh hopes of a resolution.
But the dispute, which has left Argentina largely cut off from international markets, still promised a few twists as a new round of talks took place this week in Manhattan.
On Tuesday, Argentina struck a deal to pay $1.35 billion to a group of Italian investors whose bonds the country defaulted on in 2001, according to news reports.
The deal is the first settlement with so-called holdout creditors who have not participated in earlier restructurings over debt from nearly 15 years ago. But Argentina has yet to come to an agreement with the New York hedge funds — holdouts led by the billionaire Paul E. Singer’s Elliott Management.
A stalemate involving the creditors and Argentina’s last president, Cristina Fernández de Kirchner, led the country to default on its debt again in 2014. The new administration of President Mauricio Macri has indicated that it wants to resolve the debt as part of a bigger move to reform Argentina’s economy.
Luis Caputo, the newly appointed finance secretary, and other senior government representatives met this week with principals at the hedge funds — including Mr. Elliott’s NML Capital unit, Aurelius Capital, Montreux Partners, Dart Management and Davidson Kempner — in Manhattan, according to a court-appointed arbiter Daniel A. Pollack. The group is seeking a resolution for claims totaling around $9 billion, he added.
In dispute is how much Argentina should pay in interest.
At a news conference in Buenos Aires announcing the deal with Italian bondholders, Argentina’s economic minister, Alfonso Prat-Gay, touched on the question of interest payments. ”We have said that we will respect the bond principal and that we are going to be firm in negotiating the interest, and in this particular agreement we have achieved just that.”
But, Mr. Prat-Gay added, ”The difficulty that we have right now is that some bondholders want to be paid an interest rate that, under any type of judicial criteria, is unacceptable.”
The battle between Argentina and its holdout creditors stems from 2001, when the country defaulted on billions of dollars in debt. Argentina offered to exchange the bonds it defaulted on for new bonds worth significantly less, a move that holdouts rejected. NML Capital sued Argentina seeking full repayment — principal and interest — and a Manhattan district court judge ruled that whenever Argentina paid one group of bondholders, it would also have to pay the holdouts.
This ruling could complicate Argentina’s deal with Italian holdout creditors. As part of the deal reported on Tuesday, Argentina will pay 150 percent of the original $900 million that the Italian bondholders hold from Argentine debt issued more than a decade ago. These details were reported by Bloomberg and Reuters, citing Task Force Argentina, the representative for the bondholders.
There are other issues that stand to complicate negotiations. Mr. Caputo is expected to publicly announce a proposal for the New York hedge funds this week. But these holdouts have requested that Argentina sign a nondisclosure agreement promising not to discuss the negotiations publicly.
Under President Macri, who was sworn in as president in December, the government has already taken steps to reform the economy, removing capital controls on its currency, the peso. It has also made efforts to rebuild relationships with the financial community. Representatives from Argentina held meetings with members of the International Monetary Fund during the World Economic Forum in Davos, Switzerland, seeking to reset frayed relations under Ms. Fernández de Kirchner.
”I want to insist that after so many years of conflict, we are ready to reach a settlement agreement in fair conditions,” Mr. Macri said at a news conference during the forum in Davos on Jan. 22.
The negotiations between Argentina and its creditors are being watched closely by the investment world. On Tuesday, another New York hedge fund, Gramercy, filed a $1.3 billion claim against Peru over what Gramercy claimed is that government’s refusal to properly repay defaulted debt.
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2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)
By Taos Turner
2 February 2016
BUENOS AIRES—Argentina faces $9 billion in claims from holdout creditors entangled in a legal battle against the country in the U.S., a court-appointed meditator said late Monday.
The estimate, which comes from Daniel Pollack, a New York-based attorney who is trying to help the parties resolve a dispute, is almost $1 billion less than Argentina had previously acknowledged.
Mr. Pollack said Argentine officials, including Finance Secretary Luis Caputo, met in his office for four hours with holdouts including Elliot Management Corp., Aurelius Capital Management LP, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner.
“Ideas were discussed, informally, for the resolution of the claims, which now total approximately $9 billion,” Mr. Pollack said. “No agreement has been reached as yet. No specific date or time has been set for resumption of negotiations, but it is possible that they will continue this week.”
Earlier Monday, Argentina said it planned to make an offer to the holdouts sometime this week and that it wanted the creditors to agree to reduce the amount of punitory interest applied to the debt owed to them.
The dispute stems from Argentina’s decade-old refusal to offer full payment on bonds that the holdouts bought after the country defaulted on them in 2001.
Argentine President Mauricio Macri is eager to end the conflict because it is preventing the country from borrowing money abroad and raising financing costs for both the public and private sectors.
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3. ARGENTINA TO PAY ITALIAN ‘HOLDOUT’ CREDITORS (Financial Times (FT.Com))
By Benedict Mander
2 February 2016
Argentina made its first agreement with a group of “holdout” creditors that rejected debt restructurings after the 2001 default on Tuesday, moving a step closer to regaining unfettered access to international capital markets.
The new government of President Mauricio Macri, who has vowed to normalise relations with the rest of the world, will pay a group of Italian bondholders $1.35bn in cash. That represents 150 per cent of the value of the $900m in bonds that Argentina defaulted on 15 years ago.
The deal sets a tough precedent for parallel negotiations taking place in New York between Argentina and another group of holdouts led by US billionaire Paul Singer’s Elliott Management, who are seeking to be paid around $3.50 on the dollar, or a total of around $9bn.
Alfonso Prat-Gay, finance minister, said last month in Davos that Argentina would offer the group of US hedge funds $1.20 on the dollar, although a formal proposal is due to be made this week.
The dispute with the US hedge funds remains an obstacle to Argentina’s return to the capital markets after they won a legal victory in New York in 2012 that prevented the South American country from paying other creditors before paying the holdouts in full. This led to Argentina’s second default this century in 2014.
“We are going to be tough in the negotiation [with the US hedge funds] over the interest,” said Mr Prat-Gay at a press conference on Tuesday. He was highlighting that Argentina was only paying a third of the accumulated interest that the Italian bondholders have been demanding at the International Court for the Settlement of Investment Disputes — so far without success — or a total of $2.5bn in principal and interest.
“There are some who want to charge an unacceptable interest rate,” added Mr Prat-Gay, referring to the US hedge funds.
More than 92 per cent of bondholders accepted debt restructurings in 2005 and 2010 that implied losses of about 70 per cent of the original value of their bonds. The remaining holdouts who refused the restructurings own debt with a total face value of more than $6bn at the time of the default. By some estimates, with interest included, those bonds could now be worth more than $20bn.
“After 14 long years, we are gratified to see this affair end in a manner that will result in a fair settlement of the claims of the Italian bondholders. We appreciate the willingness of the administration of President Macri in Argentina to move swiftly and maturely to deal with this longstanding problem,” said Nicola Stock, president of Task Force Argentina.
TFA represents approximately 50,000 Italian retail investors, most of whom are retired and hold on average $25,000-$50,000 in bonds each. Of the original 180,000 bondholders represented by TFA, most accepted restructuring deals or have died.
The proposed agreement will be submitted for approval by Argentina’s congress, which reconvenes in March, as well as board members of TFA.
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4. ARGENTINA SETTLES FIRST OF $9 BIL IN DEBT DEFAULT CLAIMS (Barron’s Blog)
By Dimitra DeFotis
2 February 2016
Representatives of the Argentine government agreed to pay a group of Italian bondholders $1.35 billion to settle a fraction of the $9 billion in holdout Argentina debt default cases under negotiation in a U.S. court.
The Global X MSCIArgentina exchange-traded fund ( ARGT) was down 2.4% today, while Argentina bank Banco Macro ( BMA) was down 2.7%, BBVA Banco Frances ( BFR) was down 2.3% and Grupo Financiero Galicia ( GGAL) was down nearly 2%. State-controlled oil producer YPF ( YPF) was down 2.6% along with the fall in oil prices today.
Argentine representatives were in New York Monday to negotiate with holders of defaulted Argentine debt; the cases are governed by U.S. law. Those pursuing monies are among a minority of investors who refused prior settlement offers from Argentina after it defaulted on debt. Those investors including prominent hedge funds that the former Argentine government and many in Argentina have called “vultures,” including Elliot Management, Aurelius Capital Management, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner, according to The Wall Street Journal.
But new President Mauricio Macri, installed in December, is keen on settling the cases and expanding Argentina’s access to global capital markets. Macri doesn’t control Argentina’s Congress, so it is possible that the debt terms agreed to will be stalled. That said, his economic reforms thus far have been major: lifting capital controls, devaluing the Argentine peso and spending on energy infrastructure.
The Italian creditors sought $2.5 billion in principal and interest on defaulted notes from 2001, but accepted 150 percent of the $900 million principal value, Reuters reports, adding:
“Argentine Finance Minister Alfonso Prat-Gay earlier said the Italian investors’ holdings accounted for 30 percent of all the debt that is subject to legal claims in a United States federal court and 15 percent of the defaulted debt that was not restructured in 2005 and 2010. Argentina defaulted on $100 billion of debt in 2002.”
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5. ARGENTINA REACHES CASH DEAL WITH ITALIAN CREDITORS OVER DEFAULTED DEBT (Reuters News)
By Richard Lough and Stefano Bernabei
2 February 2016
BUENOS AIRES/ROME, Feb 2 (Reuters) – Argentina has reached a deal to pay $1.35 billion in cash to a group of Italian creditors who hold unpaid sovereign debt stemming from the South American country’s record default in 2002, the investors said on Tuesday.
The deal, which is subject to approval in Argentina’s Congress, represents a payment of 150 percent on the $900 million principal value of the defaulted bonds.
“That means the entire nominal value plus 50 percent interest,” Nicola Stock, president of Task Force Argentina which grouped together some 50,000 bondholders, told Reuters.
Even though newly elected President Mauricio Macri does not hold a majority in Congress, Stock said he expected lawmakers to greenlight the deal swiftly once it returns from recess in early March.
Finance Minister Alfonso Prat-Gay earlier said the Italian investors’ holdings accounted for 30 percent of all the debt that is subject to legal claims in a U.S. federal court and 15 percent of the defaulted debt that was not restructured in 2005 and 2010. Argentina defaulted on $100 billion of debt in 2002.
In New York, Argentine Finance Secretary Luis Caputo said mediated talks with New York hedge funds leading litigation in the U.S. courts for full payment were “making progress.”
He said Argentina could make an offer to the funds on Wednesday or Thursday, though there are no signs a deal is close.
Asked how far apart the two sides were, Caputo said: “I wish I knew.”
While the agreement with Italian creditors is a boost for Macri, it may not strengthen his government’s negotiating hand.
“Argentina still has no leverage in that they want the deal more than the bondholders,” said Siobhan Morden, head of Latin America fixed income strategy at Nomura.
Argentina needs a deal to emerge from default and tap global credit markets at more affordable rates.
Last month, Prat-Gay said the previous government’s failure to reach a deal with holdout creditors had cost the economy, with creditor claims in New York rising to $9.9 billion from $2.943 billion initially.
Prat-Gay stressed on Tuesday that Argentina was committed to finding a quick and fair settlement with the U.S. investors.
The preliminary accord with some 50,000 Italian bondholders underlines the divergent views among the hedge funds and other “me-too” claimants who have joined the litigation about what an acceptable agreement looks like.
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6. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (Reuters News)
2 February 2016
BUENOS AIRES, Feb 2 (Reuters) – Argentina could reclaim a strong presence on dining tables worldwide by exporting up to twice as much beef in the next two years, after the new center-right government cut export taxes and quotas on the red meat, industry groups said.
Exports of world-famous Argentine steaks have tumbled, largely due to the trade controls imposed by the former left-leaning government which designed to keep local butchers well supplied and suppress prices.
A decade ago, Argentina was the world’s third biggest beef exporter, with annual shipments of about 771,000 tonnes.
Argentina’s Meat Industry and Trade Chamber (Ciccra) estimated beef exports will increase to 300,000 tonnes in 2017 from 200,000 tonnes last year, while the Aacrea association of meat producers forecast 350,000 tonnes. Agriculture consultancy group Tonelli & Associates put the figure at 400,000 tons.
The groups spoke to Reuters last week.
“Argentina is returning to the market,” Mario Ravettino, president of the Consortium of Meat Exporters ABC, declared.
Argentina lifted restrictions on beef in the second week of January, a month after center-right Mauricio Macri took office on a platform to liberalize the spluttering economy.
Ricardo Negri, secretary for agriculture, livestock and fisheries said in a telephone interview that Argentina hoped to start shipping beef to the United States and Canada after both lifted their own restrictions on Argentine beef. It would also increase shipments to established markets such as Russia and China, he said.
An increase in exports could prove a boon for foreign meat packers operating in Argentina, including Brazilian firms JBS and Marfrig Global Foods.
“There’s a change of mood in the industry,” said Miguel Schiariti, president of the meat packers Ciccra chamber. “Expectations are running high, prices are improving and producers are betting on increased activity.”
In South America, Argentina lags behind Brazil and its much smaller neighbors Uruguay and Paraguay in beef exports.
Argentina’s decline as a meat exporter underlines the impact of former President Cristina Fernandez’s protectionist policies since 2008 on the country’s external beef trade as farmers switched to cash crops such as soy.
The U.S. Department of Agriculture estimated that in 2016 Argentine beef exports will increase 15 percent to 265,000 tonnes.
Victor Tonelli of Tonelli & Associates forecast Argentina’s herd would in five years grow to 58 million head of cattle, its highest since 2008, from the current 51.5 million.
Meat industry chamber Ciccra said a dip in the number of heifers slaughtered in December from a year earlier could suggest farmers were taking the first steps toward increasing their cattle stock.
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7. ARGENTINE PRESIDENT’S NEW SECURITY AGENDA LIKELY TO PROVOKE TERRITORIAL COMPETITION BETWEEN DRUG GANGS, RAISING VIOLENT CRIME RISKS (IHS Global Insight Daily Analysis)
By Laurence Allan
2 February 2016
A high-profile prison break in late December 2015 focused attention on the Argentine government’s new security strategy.
IHS perspective
Significance
On 22 January, President Mauricio Macri declared a 12-month nationwide-security state of emergency, in the aftermath of a highly publicised prison escape in Buenos Aires.
Implications
The 22 January move also signals a wider range of organisational and capacity restructuring aimed primarily at pushing back drug-trade-related violent crime.
Outlook
In a context of public-spending austerity, efforts to dampen the rapid increase of organised drug trafficking face funding and co-ordination challenges which are likely to dampen the effectiveness of the plan in the two-year outlook.
On 28 December 2015, three convicted murderers in a high-profile case escaped the Buenos Aires province prison of General Alvear, sparking a 13-day manhunt before recapture. Subsequently, seven high-ranking officers from the provincial police senior leadership were pushed into compulsory retirement by the Ministry of Security amid criticisms across the political spectrum of their effectiveness, The issues surrounding the event highlighted widespread worries about the rising trend of violent crime in Argentina, and that the case indicated direct links between criminal networks, the police, and political actors.
Special forces officers waiting for recaptured murder convicts Lanatta and Schillaci outside the Federal Court Building, Buenos Aires, Argentina, 11 January 2016. PA.25220297
Benefitting from comparatively good infrastructure, a plethora of major ports, and with the relocation of major drug traffickers to the country from Colombia and Mexico, Argentina has grown in importance as a transit point for trafficking cocaine to major consumer markets in North America and Europe. Argentina is also a growing market for consumption itself, notably of the cocaine derivative paco, driving a spike in violence since 2013, most notably in Rosario. Criminal groups are proliferating, amid a territorial dispute for control of the growing local narcotics consumption market. There is also evidence to connect local groups to Mexican cartels, such as the Sinaloa cartel. The recurrent presence of Colombian contract killers suggests transnational connections are getting denser and more complex.
Argentina’s official data from mid-2015 assessed a murder rate of 8.8/100,000 residents, a 16% year-on-year increase over 2014. Most crime indicators now show deterioration, especially in hotspots in Buenos Aires province and Santa Fe. Although still far lower than in comparable cities in neighbouring Brazil – which display murder rates as high as 60/100,000 – Greater Buenos Aires has a murder rate of 10.58/100,000 and Rosario City climbed in 2015 to 15.24/100,000. In terms of public perception, the Catholic University Social Debt Observatory found that 75% of Argentines felt “in imminent danger of being victims of crime”, up 20% between 2010 and 2014.
On 22 January, President Mauricio Macri declared a 365-day nationwide state of emergency, with Decree 228/16 outlining the key points of Macri’s new security policy.
Key policy features
Decree 228/16 is based on a heightened effort to respond to increasingly sophisticated security challenges posed especially by organised crime and drug trafficking.
The decree authorises the Ministry of Security to call up retired federal, border, and airport police personnel. The decree involves the security, defence and transport ministries – and the customs office and AFIP tax office when necessary – in the task of reinforcing security mechanisms, while it allows the faculty to acquire all material means to increase border control. President Macri also relaunched international co-operation, specifically with Israel, on security and defence technology co-operation.
Outlook and implications
Key challenges to the new strategy are notably centred on the lack of sufficient federal funds, given expected austerity. Although the greater budgetary flexibility noted for the cabinet chief should facilitate operational objectives, the government’s overarching economic strategy to control public spending is likely to restrict investment in the new security strategy at least through 2016. That will also bleed into the sensitive question of co-ordination between federal and provincial police, who are ultimately overseen not by the federal government but by the provincial authorities. In the case of Buenos Aires province, that hurdle is mitigated by the presence of a close ally of the president in the provincial governor. However, this advantage only applies in half of Argentina’s provinces.
In the two-year outlook a rise in violence is nevertheless to be expected. If Macri’s strategy unfolds to plan, pressure on drug gangs will generate an ugly backlash, especially in hotspots like Rosario and parts of Greater Buenos Aires. This will most likely come in the form of redistribution of power and territory between gangs, with a heightened likelihood of incidental injury risks to bystanders, and the potential that drug gangs squeezed out of their main areas of operation may branch out into other revenue-generating practices. Regional experience indicates that extortion of individuals and businesses and kidnapping risks would be the most likely areas of such diversification.
Increased control at points of entry (air, land, and sea) to prevent the entrance of drugs. The old “North Shield” operation will be replaced and expanded by the “Border Operative”, although North Shield will remain active until 31 December 2016. The main geographical focus will be the northern part of the country, notably the 830-kilometre border with Colombia’s major cocaine-exporting neighbour Bolivia. New border operations will be permanent with a planned significant upgrade of radar coverage.
A new protocol for the armed forces in Argentine airspace marks a step change for the military in domestic crime prevention which, since 1983, have had tight limits imposed on their actions on domestic soil and airspace. The armed forces are now authorised to “identify, warn, intimidate, and use force (as a last resort) with intruders in the Argentine airspace”. Despite the creation of a Human Security Cabinet, it is clear the thrust of the policy is that of a “war on drugs”. Other experiments such as the so-called “Medellín model”, which is focused more on urban planning, physical connectivity, and social integration than in command and combat, are being introduced in Córdoba. This is clearly a departure from the national model advanced by Macri, and is likely to test co-ordination between national and provincial-level authorities, especially given that Córdoba’s governor, José Manuel de la Sota, aspires to leadership of the main national political opposition.
The Ministry of Security will have full operational control over the criminal response strategy. Critically, the executive cabinet chief is empowered to reassign budget items to the Ministry of Security in order to provide the “necessary” material means to implement the plan “effectively”. The financial and operational relationship between police and political provincial powers is as yet undecided, but the budgetary power assigned to the cabinet chief looks likely to make overall co-ordination and operational effectiveness more probable.
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8. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (The New York Times)
By Richard Lough
Feb. 2, 2016
BUENOS AIRES — Argentina could reclaim a strong presence on dining tables worldwide by exporting up to twice as much beef in the next two years, after the new center-right government cut export taxes and quotas on the red meat, industry groups said.
Exports of world-famous Argentine steaks have tumbled, largely due to the trade controls imposed by the former left-leaning government which designed to keep local butchers well supplied and suppress prices.
A decade ago, Argentina was the world’s third biggest beef exporter, with annual shipments of about 771,000 tonnes.
Argentina’s Meat Industry and Trade Chamber (Ciccra) estimated beef exports will increase to 300,000 tonnes in 2017 from 200,000 tonnes last year, while the Aacrea association of meat producers forecast 350,000 tonnes. Agriculture consultancy group Tonelli & Associates put the figure at 400,000 tons.
The groups spoke to Reuters last week.
“Argentina is returning to the market,” Mario Ravettino, president of the Consortium of Meat Exporters ABC, declared.
Argentina lifted restrictions on beef in the second week of January, a month after center-right Mauricio Macri took office on a platform to liberalize the spluttering economy.
Ricardo Negri, secretary for agriculture, livestock and fisheries said in a telephone interview that Argentina hoped to start shipping beef to the United States and Canada after both lifted their own restrictions on Argentine beef. It would also increase shipments to established markets such as Russia and China, he said.
An increase in exports could prove a boon for foreign meat packers operating in Argentina, including Brazilian firms JBS and Marfrig Global Foods.
“There’s a change of mood in the industry,” said Miguel Schiariti, president of the meat packers Ciccra chamber. “Expectations are running high, prices are improving and producers are betting on increased activity.”
In South America, Argentina lags behind Brazil and its much smaller neighbors Uruguay and Paraguay in beef exports.
Argentina’s decline as a meat exporter underlines the impact of former President Cristina Fernandez’s protectionist policies since 2008 on the country’s external beef trade as farmers switched to cash crops such as soy.
The U.S. Department of Agriculture estimated that in 2016 Argentine beef exports will increase 15 percent to 265,000 tonnes.
Victor Tonelli of Tonelli & Associates forecast Argentina’s herd would in five years grow to 58 million head of cattle, its highest since 2008, from the current 51.5 million.
Meat industry chamber Ciccra said a dip in the number of heifers slaughtered in December from a year earlier could suggest farmers were taking the first steps toward increasing their cattle stock.
10. ARGENTINA: WHY THIS TIME MAY BE DIFFERENT (Seeking Alpha.com)
Feb. 2, 2016
Summary
· Argentina has earned a bad reputation in financial markets after several sovereign debt defaults over the last few decades.
· Continuous economic and political mismanagement have been the cause of these repeated disasters.
· A new business friendly Government plans to change things for good. Will it succeed?
· We introduce the investment alternatives available for US investors interested in Argentina.
Back in April 2015, we wrote about what lied ahead for Argentina, the third biggest economy in Latin America that had been an outcast from global markets since its last sovereign debt default in 2001. In our article, we suggested that three political scenarios were in sight, with more business friendly candidates Mauricio Macri and Sergio Massa with fewer chances of winning the National Election than ruling party’s candidate Daniel Scioli. We suggested that Macri and Massa would obviously be a better option for the economy and financial markets, but we were not optimistic about their chances.
In November, however, Mauricio Macri was elected President in a historical election. Mr. Macri’s party won all of the country’s important districts, defeating the Peronist Party for the first time in history in its home ground of Buenos Aires Province. This election was a game changer in many senses and local financial markets soared with the news, with local index MERVAL rising over 40% between October (when first round elections gave Macri the lead) and December (when he was finally elected). Much of these gains were lost in late December and early January as the combination of emerging markets meltdown and unpleasant but much needed economic measures brought investors back to short term views.
Track Record
We have stated that economic mismanagement has been the main cause of Argentina’s financial disasters over the last decades. Mismanagement has prevented the country from exploiting its vast array of natural and human resources. Some investors in Argentina and specialized managers in Wall Street believe this time may be different, as the new administration has announced plans to normalize the economy and its members have a very strong track record for execution.
The son of one of Argentina’s wealthiest businessman, Mr. Macri first high profile job was as a President of Boca Juniors, one of Latin Americas top football clubs and one of Argentina’s most valuable brands. Mr. Macri took over an almost bankrupt institution with very poor results and in 8 years turned it into one of the world’s most respected football brands. Under his management, Boca Juniors became world football champions in 2000 and 2003, beating heavyweights Real Madrid and AC Milan.
In 2007, Mr. Macri was elected as mayor of Buenos Aires City, Argentina’s Capital and ruled for two consecutive terms, being reelected in 2011. Under his management, the city undertook several infrastructure projects which were funded with budget surpluses and debt. With Argentina’s federal government banned from issuing debt in international markets, Buenos Aires had a better debt rating than its federal counterpart for much of the last decade. Mr. Macri’s tenure as BA mayor landed him at spot a the presidential race.
Helping Mr. Macri solve Argentina’s economic puzzles is Alfonso Prat Gay, a former J.P. Morgan (NYSE:JPM) economist and investment banker who served as President of Argentina’s Central Bank from 2002 to 2004 and was in charge of managing the aftermath of the country’s debt default and economic collapse of 2001. As head of the Central Bank, Mr. Prat Gay managed to lower inflation from 40% to 5% in two years. He leads a team of US schooled and trained professionals.
First Steps in the Right Direction
Almost two months into the new administration, the Government has managed to solve some of the most urgent economic puzzles.
In December, Mr. Prat Gay swiftly announced the end of the foreign currency controls that had been in place since 2011 and had had disastrous effects on the economy (we wrote about them here). Surprisingly, after individuals and business were allowed to freely buy foreign currency for the first time in four years, the Argentina Peso soared, reflecting strong confidence in the new administration.
Dwindling foreign currency reserves, which had been another major issue, are also being addressed. Last week, a consortium of global banks including JP Morgan (JPM), HSBC (NYSE:HSBC), Santander (NYSE:SAN), BBVA (NYSE:BBVA), Deutsche Bank (NYSE:DB) and UBS (NYSE:UBS) signed a $5B credit facility with Argentina’s Central Bank.
Regarding Argentina’s ongoing dispute with a group of US based hedge funds in relation with 2001 defaulted bonds, which has prevented the country from tapping global markets for more than a decade, Government officials expect to reach a deal in the short term and Mr. Macri has publicly pledged to do so. This will most likely affect Argentina’s credit ratings, with a significant upside potential in sovereign bonds.
Investment Alternatives
Having being an outcast from global financial markets for more than a decade, there are not that many tools for investing in Argentinean assets for global investors. There is no liquid ETF tracking the Argentinean stock index, but there are thirteen Argentina based companies trading in US markets through ADRs and two companies doing so directly:
– Banco Frances (NYSE:BFR) – Banking
– Banco Macro (NYSE:BMA) – Banking
– Cresud (NASDAQ:CRESY) – Agriculture and Food
– Edenor (NYSE:EDN) – Utilities
– Banco Galicia (NASDAQ:GGAL) – Banking
– IRSA (NYSE:IRS) – Real Estate
– Pampa Energia (NYSE:PAM) – Energy and Utilities
– Petrobras Argentina (NYSE:PZE) – Oil and Gas
– Telecom Argentina (NYSE:TEO) – Telecommunications
– Tenaris (NYSE:TS) – Industrial
– Ternium (NYSE:TX) – Industrial
– TGS (NYSE:TGS) – Gas
– YPF (NYSE:YPF) – Oil and Gas
– Mercadolibre (NASDAQ:MELI) – E-commerce
– Globant (NYSE:GLOB) – Technology
In a series of articles over the next weeks, we will introduce each of these companies to US investors that most probably never heard of them due to lack of coverage from US research firms and analysts, with a fundamental analysis of each and our fact based conclusion regarding their investment merit.
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11. UNITED ARAB EMIRATES STRENGTHENS TIES WITH ARGENTINA’S NEW GOVERNMENT (Inter Press Service)
By Fabiana Frayssinet
Feb 3, 2016
The new government of Argentina and the United Arab Emirates (UAE) are strengthening the relationship established by the previous administration, at a time when this South American country is seeking to bring in foreign exchange, build up its international reserves and draw investment, in what the authorities describe as a new era of openness to the world.
Bilateral ties will be boosted during a visit to the Argentine capital by the UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan, on Feb. 4, the start of his Latin America tour which will also take him to Ecuador, Colombia, Panama and Costa Rica before he flies out of the region on Feb. 12.
After several high-level meetings on Feb. 5, the minister’s visit will end with the signing of five agreements on taxation, sports, cooperation between the state news agencies Telam (Argentina) and WAM (UAE), and an Emirati loan to the southern province of Neuquén.
Mauricio Macri, who was sworn in as president of Argentina on Dec. 10, already indicated his interest in stronger ties when he met on Jan. 20, during the World Economic Forum in Davos, Switzerland, withHamad Shahwan al Dhaheri, executive director of the private equities department of the Abu Dhabi Investment Authority (ADIA).
ADIA, considered the second-largest sovereign wealth fund in the world, manages the excess oil revenues of the UAE, a federation of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain.
The centre-right Macri, of the Cambiemos coalition, and Al Dhaheri“discussed the prospects opening up for Argentina and were enthusiastic about this new era for the country,” Telam reported from Davos.
The news agency was referring to the end of 12 years of government by the late Néstor Kirchner (2003-2007) and his widow and successor, Cristina Fernández (2007-2015), of the Front for Victory, the Justicialista (Peronist) Party’s centre-left faction, which defines itself as anti-neoliberal.
“Argentina has to position itself as a serious, predictable interlocutor,” this country’s foreign minister, Susana Malcorra, said in Davos.
“The question of economic opening, the search for investment and business opportunities is essential in our agenda,” she stressed.
According to a report from its embassy in Buenos Aires, the UAE has a significant presence in international capital markets through different investment institutions, such as ADIA, Dubai Ports World, Dubai Holding and Abu Dhabi’s International Petroleum Investment Co.
The UAE is a timely interlocutor for Argentina, Luis Mendiola, an expert on the Middle East, the Arab world and Africa with the Argentine Council for Foreign Relations (CARI), underlined in an interview with IPS.
“Their biggest problem is the extraordinary abundance of capital…the question is where to put it to get the best returns on the extraordinary surplus capital they produced during nearly a decade and a half of high oil prices,” added Mendiola, who served as ambassador to Saudi Arabia from 1996 to 2005.
These funds, he said, could go into major infrastructure projects in areas like housing, energy, transport and communications.
In January 2015, the authorities in the southern Argentine province of Neuquén reported that they had secured an 18 million dollar loan from the Abu Dhabi Fund for Development, to finance the Nahueve Hydroelectric Project for the promotion of irrigation in new productive areas, among other aims.
The two countries established diplomatic ties in 1975 and opened embassies in 2008. But relations moved to a new plane when President Fernández visited Abu Dhabi in January 2013, where she met with UAE President Khalifa bin Zayed al Nahyan.
During that visit, cooperation agreements were signed in the area of food, with the opening of the Emirati market to non-traditional Argentine products, and this country opened its first business office in the UAE.
In 2014, as the Argentine-Arab Chamber of Commerce informed IPS, trade between Argentina and the UAE amounted to 228 million dollars, with this South American country enjoying a surplus, exporting 198.9 million dollars in mainly foodstuffs and steel pipe and tube products.
But Mendiola believes there is greater potential to tap because besides boasting one of the highest per capita incomes in the Gulf, the UAE is a business hub which re-exports products to third countries and large markets, such as Saudi Arabia, India, Iran and Pakistan.
Bilateral ties were reinforced in April 2014, with a visit to Argentina by Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and emir of Dubai.
A memorandum of understanding for cooperation in the peaceful use of nuclear energy was signed during that visit.
On that occasion, Fernández emphasised the Argentina forms part of the “exclusive club” of nations “that can produce nuclear energy, but that do so on a non-proliferation basis.”
The then president also referred to the UAE’s “enormous interest” in investing in Argentina and financing projects aimed at bolstering food security.
In November 2015, with support from the local government, five family farming cooperatives from Argentina took part in an international specialty food festival in Dubai.
During the meeting in Buenos Aires, agreements were also reached to promote tourism initiatives and projects in renewable energy – an area in which the UAE, despite its status as one of the world’s largest oil producers, is considered a pioneer among the Gulf countries and even at the international level, Mendiola noted.
“The Emiratis are very good at forging ahead and moving into new areas, and in that sense they are a model, at least in the Gulf region,” he added.
During his visit to Argentina, Al Maktoum remarked that his country did not invest “according to preferences or political motives, but based on economic questions.”
For that reason Mendiola said he was not “surprised” by the UAE’s interest in Latin America “because the Gulf countries in general have always had extremely pragmatic foreign policies which are at the same time modest, in terms of maintaining a low profile.”
“I think the difference now is they are taking advantage of the fact that there is a new government in Argentina, which presents itself to the world as very different from the last one, and that is raising a lot of interest because they have an extraordinary level of reserves as well as investment abroad,” he said.
Mendiola pointed out that the UAE did not have a “clear” presence in Latin America until recently, unlike in Africa and Asia.
“Up to now, South America was a caboose for the Gulf countries, from the point of view of their economic interests. And the change in government without a doubt awakened curiosity and interest in seeing how to best take advantage of these opportunities,” he added.
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12. GEVO ENTERS JOINT VENTURE TO DEVELOP BIOFUELS PLANTS IN ARGENTINA (The Denver Post)
By Alicia Wallace
02/02/2016
First facility targeted to start production in 2017
Gevo, a Douglas County-based developer of biofuels as substitutes for jet fuel and plastics, has inked a licensing agreement to develop production facilities in Argentina, the company announced Tuesday.
Gevo signed a licensing and joint development agreement with Porta Hnos S.A. to develop several plants in Argentina that can produce biofuel isobutanol from corn.
Financial terms were not immediately disclosed.
The first plant, slated to come online by 2017, has an expected annual production of 5 million gallons of isobutanol. Gevo is projecting about $1 million in annual revenue — from royalties, marketing fees, and yeast sales — once the Porta-owned plant is operational.
The production capacity of any additional plants and the projected costs and revenue associated with those facilities have yet to be disclosed, Gevo officials said.
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