ARGENTINA – Extension of debt negotiations deadline (May 2020).
On May 11, Argentina announced the extension of negotiations over its $65 billion debt restructuring proposal until May 22 to “increase participation”. The extension sets the stage for tense last-ditch talks as Argentina races to avoid default.
The new deadline (previous passed without the support needed for a comprehensive deal), means the offer will expire the same day Argentina could trigger default over a $500 million interest payment. Please refer to previous post of April 2020.
Argentina is racing to revamp unsustainable debts amid a strong recession, high inflation, and increasingly expensive borrowing costs as concerns over a potential ninth sovereign default have rattled investors and hit bond prices.The talks so far have not been easy with 3 major creditor groups rejecting the initial proposal and pushing for improved terms. Argentine officials have said the country cannot afford to pay more but they are open to counterproposals. To be continued…
PARAGUAY– Fear to contain pandemic due to Brazil (May 2020).
Paraguayan President Mario Abdo Benítez has said the spread of COVId-19 in Brazil threatens his country’s success in containing the virus. According to Mr Benítez, more than half of Paraguay’s 563 cases were people who had entered from neighbouring Brazil.
The country has spent the last 2 months under a strict lockdown, and most people with the disease are being quarantined in guarded shelters. Meanwhile, Brazil has become the worst-hit country in South America. The 2 countries share a 400 km border which is usually loosely controlled. But President Benitez decided to reinforce and militarize “the most vulnerable parts” of the border.
Mr Benítez is one of several leaders in the region who have expressed concern about Brazil’s fast-developing outbreak. Argentina’s President Alberto Fernandez has said that trade between the two countries is a risk, with truckers hauling goods south to his country from Sao Paulo, one of the most infected regions of Brazil.
Jair Bolsonaro has repeatedly said that the risk posed by coronavirus has been exaggerated, and has clashed in recent weeks with state governors who have imposed lockdowns. In Brazil, 30 requests for the dismissal of Bolsonaro were already sent to the Chamber of Deputies.
ARGENTINA – Update on Curupi Pora farm activities (May 2020)
Situation/weather: While Government extends lockdown for cities with a population over 500 000 people until May 10th to contain virus, smaller cities like Corrientes may return to normal activities if they meet 5 requirements. This will help the recovery of the local economy but without real impact for us as farming activities were mandatory excluded from quarantine. Farm operations are running as normal and we took preventing organization measures to prevent the sprayed of the virus and run the risk that the entire farm personal may be put in isolation if someone from the staff may be affected when they return to their families. So far, no cases have been declared among our staff in any of our farms.
As for the weather, the farm starts “to look a bit dry” as we registered a warm and dry month of April (with temperature exceeded 30°C) and few rains were registered since the beginning of the year (-18% compared to historical rainfall). No water stress has to be reported so far but we would appreciate some rains to boost pastures.
Cattle operation (6,042 heads): The cattle is in good shape. We are testing pregnancy of heifers previously inseminated. We are also selling 360 male calves. Then, we are entering in a stabilization phase and we will focus on the maximisation of the pregnancy ratio of breeding heifers. We have reached around 3,000 breeding cows and heifers by retaining until now young female calves to increase and replace mothers’ herd.
Silage and pasture program: We are in process of sowing 158 has with OAT and 118 has of Ray grass. Both grasses have a high protein content to feed cattle and support high loads of animals per hectare. OAT is also cleaning the soil and improving its structure.
In addition, we are also buying 245 tons of corn and 170 tons of pellets and mixed supplementation to cover food needs for the winter. Those pellets have in particular a higher nutrition density, higher economic benefits (animals can digest, absorb and conserve better) and are easier to store/transport than traditional silage.
ARGENTINA – Bondholders reject Argentina’s debt restructuring proposal (April 2020).
On April 20, Argentina’s biggest bondholders have rejected the proposal laid out by the government late last week to restructure $83 billion of foreign debt, raising the prospect that the country could enter into default as early as next month.
Argentina has chosen to make a unilateral offer which would have reduce debt payments by $41.5 billion and give the country time to pull out of a recession that is only expected to get worse as a result of the Covid-19 pandemic, according to Argentine Economy Minister Martín Guzmán.
The proposal calls for a 3 year grace period on capital and interest payments, a 62% discount in interest payments and a 5.4% reduction in capital payments, which combined would provide $41.5 billion in debt relief. If accepted, bondholders would swap 21 outstanding bonds for new notes that mature in 2030, 2036 and 2047. The new bonds, denominated in US dollars and Euros, will pay between 0.5% and 4.875% per year, for an average rate of 2.33% that will start to accrue on 15/11/22. No payments of principal or interest will be made until 2023.
However, creditors denounce this restructuring plan as unacceptable. Even if Mr Guzmán said this was the final offer, room for negotiations with the creditors should be found. It is better for Argentina to reach a deal with the bondholders than to default.
Short term, Argentina needs to pay around $500 million in interest payments on bonds included in the restructuring on April 22. If it misses the payment, it will have a 30-day grace period before triggering a default around May 22. To be continued…
ARGENTINA – Update on San Bartolo farm activities (April 2020).
Situation/weather: The farm is still partially under water after the torrential rains registered earlier in February. The water is very slow to evacuate as the problem is emphasised by the illegal internal protection walls build by some farmers upper the river which affected and changed water course (a legal action is ongoing and cleaning plans have already been approved by local authorities). Rains have still been registered there since.
Some facilities and houses are still under water as well as some full access to sections of the farm. For now, we must wait the water has evacuated.
Cattle operation (2,660 heads): The gauchos have regrouped the cattle of flooded sections to transfer them to dry areas in order to prevent sanitary issues (hoof disease, tick, etc) and cattle losses (shrinking, weight loss, injury, etc). Mothers and young calves are the most sensitive categories and need food supplementations given their morphology.
To avoid supplementation cost and to reduce temporally the density per hectare of animals, we are selling 120 Male calves.
