IGAF Latin America & Caribbean

Asociación Interamericana de Contabilidad - Federación de Colegios de Contadores Públicos de Venezuela

ebravo@bravocpas.com (Eduardo Bravo Losada) — Sat, 08 Nov 2008 21:58:00 +0000

Deseo agradecer muy sinceramente al Sr. Presidente Lic. Rafael Rodríguez Ramos y al Sr. Secretario de Estudios e Investigaciones, Lic. Rafael J. Dugarte Rivas, de la Federación de Colegios de Contadores Públicos de Venezuela, la invitación que me han cursado para brindar una conferencia sobre:

Control de Calidad de las Firmas Auditoras

en oportunidad de celebrarse el Seminario Interamericano sobre la Estandarización de la Información Financiera, en Isla Margarita, Estado de Nueva Esparta, organizado por la Asociación Interamericana de Contabilidad (AIC) y la precitada Federacíón.

Información sobre la AIC

La Asociación Interamericana de Contabilidad (AIC) se constituyó en 1949 con el objetivo principal de unir a los Contadores Públicos del continente americano, asumir el compromiso de su representación en el hemisferio y promover la elevación constante de su calidad profesional, de sus conocimientos y de sus deberes sociales. Se incorporó en 1974 bajo las leyes del estado Libre Asociado de Puerto Rico. Desde 1949 hasta esa fecha, la AIC existió con el nombre de Conferencia Interamericana de Contabilidad.

En el transcurso de su medio siglo de trabajo institucional, la AIC ha contribuido a fortalecer las organizaciones profesionales de Contadores Públicos en los países americanos que la patrocinan y participan activamente en desenvolvimiento armónico de sus conceptualizaciones y de su práctica.

A la fecha ha cumplido con su misión de ser la entidad de carácter profesional que une a los Contadores Públicos del continente americano, representados en cada país por organismos profesionales de libre agremiación.

La profesión contable debe sentirse orgullosa por haber logrado organizarse a nivel internacional y trabajado a un nivel de efectividad que es igualado por muy pocas organizaciones profesionales.

Argentina: Pension Fund Fallout

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 03 Nov 2008 23:24:00 +0000

BY LATIN AMERICA ADVISOR
Inter-American Dialogue

Argentine President Cristina Fernandez [recently] announced a plan for the government to take over the country's approximately $26 billion in pension funds. Fernandez has said she wants to protect the funds from turmoil in the global financial markets. What other factors are motivating the government’s action? What would be the impact of the pension takeover on Argentina's economy? How would it affect government spending and Argentina's credibility among investors?

José Octavio Bordón, former Ambassador of Argentina to the United States: In 1994, the state pension system, which had reached a point of crisis, was privatized at the peak of the Washington Consensus. Many of us who believed in the necessity of democratizing both society and the economy objected to the 'anticompetitive, statist, and compulsory' design of this privatization. The high costs of administration, interferences of a number of governments, and the crisis in the international financial system have generated a significant drop in total amount of capitalized funds. The state had to back them up with budgetary resources. In Argentina, the Pension Fund Administrators (AFJPs) have earned more than $12 billion in profits. There is a broad consensus on the need to transform the Argentine pension system. However, the government should avoid passing legislation too quickly. There are many technical and political concerns, especially regarding the future use of $30 billion in stock. In addition to avoiding the errors of the past, it is necessary to act now with greater prudence and institutional quality. In play are the millions of current and future retirees, the rights of Argentines who opted for the private capitalization and legal safeguards for the companies who acted within the current legal framework. During times of crisis, it is both a necessity and a right to assure that changes guarantee the well-being of citizens, but it shouldn't be an excuse to disregard people's rights and endanger the credibility of the country. A broad debate, both respectful and transparent, needs to happen in the Argentine Congress, similar to that which occurred over the taxes on the rural sector. This is the best road toward change, with legitimacy and legality both in the international and domestic context.

Milko Matijascic, Head of the Institute for Applied Economic Research at the UN Development Program's International Poverty Center in Brasilia: Pension reform is a complex problem in South America. First, local financial markets were small and couldn't easily absorb such a large volume of funds; second, with large informal sectors and low contribution densities, large numbers of workers are not generating sufficient savings to fund their retirements; third, with defined contribution schemes, market risks fall upon the shoulders of individual workers. As one considers the current crisis, these factors are critical. By October 20, the average pension fund fell 16 percent compared to the average value in 2007. A steep market decline and a precarious labor market would lead to poor returns for the pension system. Ironically, the debate in Argentina did not touch upon these three factors. The government appears motivated by fiscal concerns. If the pension funds' resources are taken over by the government, it may provide short-term relief, but at the expense of significant problems in the long term (including loss of credibility). Such drastic reforms should be preceded by extensive public debate and deliberation. This is the approach that Chile took as the Bachelet Administration achieved consensus prior to its landmark reform earlier this year.

Claudio Loser, Senior Fellow at the Inter-American Dialogue and former Head of the Western Hemisphere Department at the International Monetary Fund: The announced nationalization/expropriation of the Argentine pension funds constitutes one of the most blatant acts of financial piracy in the country's recent history. In terms of its gravity, it stands on par with the freeze on deposits of the banking system introduced at the time of the collapse of convertibility (the relation of one to one between the local currency and the US dollar). Contrary to the alleged claim that, once approved by Congress, it will protect the pension money saved by many Argentines, the action is intended to provide the government with fresh resources to solve its mounting fiscal problems. The proposed expropriation would eliminate individual savings, and convert them into a pay-as-you go system, with large funds that could be spent almost freely by the Argentine government. The transfer is equivalent to 10 percent of GDP, plus an annual flow of pension contributions equivalent to about $5 billion (1.5 to 2 percent of GDP). The unexpected and ill-designed plan has brought the financial system into crisis, with a precipitous decline in the stock market, pressures on the exchange rate, and a sustained loss of reserves at a time when Argentina is facing a drastic decline in export prices. Argentina was being shunned by foreign creditors and investors before this measure but it is now considered in virtual default, with grave and possibly unintended consequences on the country's economy.

Robert C. Helander, Managing Partner at InterConsult LLP in New York: Where to start on Argentina? After repeated demonstrations of fiscal sinverguenceria, one wonders how any government in Argentina will ever be able to convince its own citizens that their elected leaders can be trusted. Years ago, in an effort to attract foreign capital, the government guaranteed national treatment for foreign investors. Some invested on that premise, and they surely got the 'national treatment,' pesification, phony statistics, pressure to invest in government paper, etc. If Peronist government after Peronist government has mismanaged the economy and maltreated its own citizens, it is hard to think that any foreigner, save for the politically-motivated Venezuelan leader, might invest. As for lenders, there is no way to quantify the moral hazard. Absent a multinational bailout, another devaluation and default will be hard to avoid. The proposed 'protective measure' of nationalizing the private pension funds would only delay the deluge and make it that much harder for a future president to regain internal balance and respect. Do cry for Argentina; it is a sad story without a visible good ending.

Mexican Miner Takes IPO to London

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 14 Apr 2008 04:27:00 +0000

Penoles, the Mexican mining giant, plans to carve out its precious metals unit, to be called Fresnillo, and list it on the London Stock Exchange. The total offering, slated for May, is estimated at roughly $2bn and will include $900m worth of primary shares, say executives close to the process. JPMorgan Cazenove is the lead on what the issuer says will create the world’s largest primary silver producer. The decision to list in London is an unfortunate one for LatAm exchanges like the Mexican Bolsa, or the Bovespa-BM&F, which would have benefited from such a high profile and sizable deal. The latter has made no secret of plans to consolidate LatAm liquidity on a single platform. “The decision to list in London was made a while ago, and based on the fact that other big mining names such as BHP Billiton, Rio Tinto and Anglo American are listed there,” says a banker familiar with the deal. Peru’s Hochschild Mining listed itself on the LSE in 2006, also via JPMorgan. The deal is timed to coincide with record highs for gold and silver, the company’s main metals. “They’re carving it out to realize untapped value in the company,” says a banker close to process. He notes that within Penoles, the operation has a lower multiple than it would on a standalone basis. Citi, Canacord Adams and UBS will be co-managers on the equity deal. Peñoles intends to retain at least 75% of the ordinary shares of Fresnillo plc on completion of the offer.

LatAm Equity Funds Make Decent Return

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 14 Apr 2008 04:23:00 +0000

LatAm equity funds returned 1.28% in the week ended April 10, according to Lipper. China region funds sank 0.46%, while EM funds rose 1.26%. The biggest gains were made by gold oriented funds with 2.08%, while Japanese funds dropped the most, with a loss of 3.11%. LatAm outperformed the world equity funds group, which overall sank 0.30%. They are up 3.11% year-to-date.

UK Manager Readies New LatAm Funds

ebravo@bravocpas.com (Eduardo Bravo Losada) — Tue, 08 Apr 2008 08:54:00 +0000

BlueCrest Capital Management, a London-based asset manager with $14bn under management – $2bn of which is in EM – is preparing to raise two new funds to take advantage of the opportunities it sees in EM. "Its a combination of market technicals, driven by balance sheet repair in the global financial system, as well as solid fundamentals in EM," Robert Enserro, portfolio manager at BlueCrest, tells LatinFinance, explaining the timing for the two new funds. Bluecrest which invests in multiple asset classes, is raising $150m for a 5-year targeted opportunity in LatAm fund and $250m for a 3-year opportunities investment pool focused on LatAm and EEMEA. They will invest in private debt and equity. BlueCrest has invested in a number of pre-IPO companies in LatAm.

IIF Sees Moderate Growth Deceleration

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 07 Apr 2008 18:42:00 +0000

New data from the Institute of International Finance (IIF) predicts a moderate slowdown in growth across the board in LatAm through 2009. Regional expansion is forecast to ease to 4.4% in 4.1%, respectively, in 2008 and 2009, from 5.3% last year. This includes a decline this year to 2.7% in Mexico (versus 3.2% in 2007) and 4.6% Brazilian growth, from 5.4% last year. However, the IIF foresees a pickup in Mexico to 3.5% next year. Peru is set to fall from 8.5% in 2007 to 6.5% and 6.0% in the next few years, while the corresponding figures for Argentina are 8.7%, 6.8% and 4.2%, and for Colombia 7.1%, 5.1% and 4.5%. Inflation is meanwhile set to hit 6.4% this year, up from 6.0% in 2007 and 4.8% in 2006, says the IIF. It expects monetary policy to hold or tighten in coming months in Brazil, Chile, Colombia and Peru. Mexico meanwhile looks set to ease in the second half. “Most of the countries have shown solid growth in their economic activities and most of it comes from the domestic demand. Investors are optimistic,” says Carola Sandy, analyst at Credit Suisse.

Equity Markets Face Challenging Months

ebravo@bravocpas.com (Eduardo Bravo Losada) — Sat, 05 Apr 2008 21:02:00 +0000

LatAm equity has outperformed other EM in the past month and quarter, but the next two quarters may be more challenging. “The short term outlook is more uncertain for LatAm equities,” says Geoff Dennis, head of equity strategy at Citi, referring to a 3-4 month timeframe. “If the global market continues to be weak, LatAm stands a chance of underperforming because it’s done so well until now,” adds the strategist. Bearish and volatile trading would keep the roughly 20 equity issuer hopefuls – mostly from Brazil – stuck in the pipeline. In the longer run, however, Citi maintains a bullish call on the region. It is constructive on EM and global equities if the US economy manages to turn around in the second half. The outlook for a continued up trend in commodities is still very positive, says Dennis. He notes that despite strong improvements in the region’s fundamentals, LatAm strength is largely supported by firm commodities, with oil, iron ore, copper, gold and pulp among the chief benefactors. LatAm stocks outperformed global EM in March for a seventh consecutive month, according to Citi, which points out the last time that happened was 1997. Brazil’s main equity index, the Bovespa, underperformed LatAm in March, falling 7.8% on the heels of an 11.9% surge in February. Peru dropped 5.1%, while Chile was the region’s strongest riser, gaining 7.7%, says Citi. Argentina and Mexico also had a positive March, rising 5.8% and 5.7% respectively.

DLJ Raises $300m for South America PE

ebravo@bravocpas.com (Eduardo Bravo Losada) — Wed, 02 Apr 2008 20:21:00 +0000

DLJ South American Partners has started allocating from a new $300m private equity fund. The firm’s main principals, Buenos Aires-based Carlos Garcia and Marcelo Medeiros in Sao Paulo, are heading the effort and have already spent $82m across three deals. “Capital markets liquidity has dried up recently in Latin America and we believe that enhances our opportunities to identify investments going forward,” Garcia tells LatinFinance. The firm will employ various strategies, including buyout and growth capital, across all sectors. It will look to take controlling stakes in companies in order to gain greater influence over management and the exit strategy, says Garcia. The executive declines to specify by when he expects the $300m to be spent, though he speculates that given the number of opportunities, it may be a lot sooner than the fund’s mandated 5-year horizon. DLJ has invested in LatAm for several years from its global fund, but this is its first dedicated vehicle. DLJ South America Partners is a joint venture between Credit Suisse and the management team that was set up in late 2006 to target deals in South America. Since then, the entity’s three deals have been: Arcos Dorados, the LatAm McDonald’s business; Fispal, a food and beverage trade show promoter, of which it acquired 100%; and EBEC, an educational company in Brazil. DLJ joins a number of other PE shops raising new funds for the region, including Advent International and the Carlyle Group.

UMS Brings $1.25 in Exchange Warrants

ebravo@bravocpas.com (Eduardo Bravo Losada) — Fri, 28 Mar 2008 07:18:00 +0000

Mexico plans to sell warrants with a notional value of $1.25bn that will allow investors to exchange foreign currency debt for peso debt. On April 2 and 3, investors will be able to purchase two types of warrant that allows them to trade in 21 series of dollar, euro, deutschemark and Italian lira-denominated bonds with maturities between 2009 and 2034 for local bonds. The first warrant has a notional value of about $1bn and offers peso-denominated bonds due 2014, 2017 and 2036. The second is worth roughly $250m and offers 2017 and 2035 debt denominated in UDIs. Holders of the warrants will be able to receive their new bonds on October 9. This is the first Mexican warrant transaction to allow swapping into UDIs, as well as the first time the liquid global 2034s will be involved, according to a banker on the deal. This is the fourth sale of warrants since 2005. The government has exchanged more than $4bn in foreign-currency debt for peso bonds in the last two years. Barclays and Merrill Lynch are managing the transaction.

Peru to Prepay IDB, World Bank Debt

ebravo@bravocpas.com (Eduardo Bravo Losada) — Tue, 25 Mar 2008 03:05:00 +0000

Peru plans to prepay about $1.1bn of its debt to the World Bank and IDB by mid-year, according to local news and wire reports citing finance ministry official Jose Miguel Ugarte. It will use treasury funds to finance the repurchase of $620m in debt from the World Bank and $497m from the IDB, and is also considering the sale of new PES-denominated debt. Peru repurchased $838m in outstanding Brady bonds March 7. The planned buyback will be Peru's biggest since a $1.8bn repurchase of Paris Club debt in July.

Cresud Raises $288m in Rights Offering

ebravo@bravocpas.com (Eduardo Bravo Losada) — Sun, 23 Mar 2008 20:18:00 +0000

Cresud, the Argentine holding company for IRSA and a number of agricultural assets in Brazil and the Southern Cone, completed a rights offering with existing investors Tuesday that grossed it $288m through the sale of 180m shares. The deal saw strong demand from existing shareholders, which meant new investors could not participate in the offering, Alejandro Elsztain, CEO, tells LatinFinance. Of the total shares offered, 60% were distributed in the form of ADS at $16, while the remainder was sold in the form of locally listed stock, at ARP5.04. Both the ADS, which represents 10 local shares, and each local share also carry a warrant that permits holders to buy an additional share at a 5% premium. “People are very interested in our track record with commodities. There are a lot of funds talking about investing in agriculture and commodities now, but we have the experience to show for it,” says Elsztain. The CEO says the proceeds are being used push into new markets, including Bolivia, Paraguay and Urugay. Cresud, which owns a 24% stake in Cactus Argentina, a feedlot whose co-investors include Tyson Foods, says Elsztain. That business is also set to grow and might draw some of proceeds he says. Citi, Deutsche and Raymond James led the offering.

LatAm, Brazil Equities Among Favorites: ML

ebravo@bravocpas.com (Eduardo Bravo Losada) — Thu, 20 Mar 2008 12:24:00 +0000

LatAm is the preferred emerging market of choice for global equity investors in the next 12 months, according the most recent Merrill Lynch investor survey. And Brazil, along with Russia, is the top rated BRIC country, says the report, which polled 193 managers representing $676bn in AUM between March 7 and March 13. While managers were very underweight in LatAm in January, their average position changed over February and in March the region enjoys the only overweight position. Meanwhile they are neutral in EMEA and underweight in Asia. Within the BRICs, Brazil’s overweight rating has increased since January, while Russia’s has decreased from a dominant position. India and China have seen underweight positions all year so far. Brazil and Russia also enjoy the highest country allocations within all EM, followed by Thailand, Indonesia and Malaysia.

Merrill Launches Local Debt Indices

ebravo@bravocpas.com (Eduardo Bravo Losada) — Tue, 18 Mar 2008 08:48:00 +0000

Merrill Lynch is launching new local EM sovereign debt indices to track the performance of EM sovereigns debt denominated in the issuer’s local currency. “The fact that we are launching this is a reflection of the growing importance of the local debt markets to institutional investors outside of the issuer’s domestic markets,” Phil Galdi, head of Merrill’s global bond index group in New York, tells LatinFinance. “These markets have grown in size and now represent an important asset class that has offered strong historical returns with low correlation to other asset classes,” he adds. The series includes three new indices: The Merrill local debt markets plus index is a broad composite index designed to track local currency sovereign debt at A1 or lower on average; the Merrill net cap-weighted liquid local debt markets index represents a liquid basket of fixed rate bonds with country allocations based on relative capitalization weights in corresponding broad country indices. The Merrill net equal-weighted liquid local debt markets index meanwhile represents a liquid basket of fixed rate bonds with equally weighted country exposure. They are aimed at institutional investors.

Repsol YPF Argentina Offering Shares

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 05 Feb 2007 11:55:00 +0000

Oil company Repsol YPF is to sell 874,586 class ‘D’ shares belonging to a workers group this week, according to a filing with CNV, Argentina’s securities commission. The shares will be offered via Dutch auction on the Buenos Aires Stock Exchange and will be sold via MBA Sociedad de Bolsa. The share price will be set at not less than 90% of the average share price during the last six months, nor below 90% of the share’s closing price on February 6.

Pampa Holding Raises $180 Million

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 05 Feb 2007 11:54:00 +0000

Argentine energy holding company Pampa Holdings, part of Dolphin Group, priced its share offering at 2.23 pesos per share ($0.714) and its GDS at $18, the company said on Friday. The company is selling 600 million of new shares via the Buenos Aires Stock Exchange. The subscription period for the new shares will close on February 9. UBS Securities and Raymond James & Associates are arranging the transactions. In October last year Pampa issued 300 million shares worth $112 million via the Stock Exchange as part of a structural reorganization and move to increase its share capital.

TGS Sends Out Feelers For Refinance

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 05 Feb 2007 11:52:00 +0000

Transportadora de Gas del Sur (TGS), the Argentine gas transmission company, is evaluating proposals from up to six investment banks for a dollar-denominated offering expected to come to market by the end of Q1. In December, TGS filed a $650 million bond program locally. Bankers say given current favorable conditions, TGS could sell the entire amount in one go, but much will depend on pricing. Proceeds will go towards taking out bonds that have restrictive covenants.

Argentina Breaks 8%

ebravo@bravocpas.com (Eduardo Bravo Losada) — Fri, 26 Jan 2007 10:40:00 +0000

Argentina took advantage of market conditions to place the third tranche of its dollar-denominated Bonar VII bond issue, Thursday, achieving a yield of 7.71% - at the low end of market expectations. The sovereign sold $500 million of the seven-year paper, which matures December 2013. The Republic last issued the securities in November when it achieved a yield of 8.03%. The government has $500 million left of the $2 billion program. Argentina’s external financing needs in the first quarter of this year total $3.76 billion.

Argentina Takes Bids For Bonar VII

ebravo@bravocpas.com (Eduardo Bravo Losada) — Thu, 25 Jan 2007 09:39:00 +0000

Argentina will auction the third tranche of its dollar-denominated Bonar VII bond issue today, Thursday, according to the economy ministry. The sovereign is offering $500 million of the seven-year paper, which matures December 2013. The Republic last issued the securities, which carry a coupon of 7%, in November when it achieved a yield of 8.03%. This time around, Argentina will be looking for a yield of around 7.8%, say analysts. The government has so far issued $1 billion of a total $2 billion approved. Argentina’s external financing needs in the first quarter of this year total $3.76 billion. On Wednesday, Argentina’s country risk hit another record low, dropping to 190 basis points, as measured by JPMorgan’s EMBI+ index.

Banco Macro Returns For More

ebravo@bravocpas.com (Eduardo Bravo Losada) — Wed, 24 Jan 2007 10:53:00 +0000

Argentina’s Banco Macro priced Tuesday a $150 million 10-year at par to yield 8.5%. The price was tightened from 8.625% area and the deal was heard trading up marginally on the break. Sole bookrunner was Credit Suisse and orders were heard in excess of $400 million. The deal was rated B2/B+ and highlighted the continued thirst for yield from investors. Proceeds are for general funding. Macro was last in the market in December with a $150 million 30NC5 at 9.75%. Macro started its capital markets comeback in March 2006 with an impressive $300 million IPO.

Argentina: Record Exports In 2006

ebravo@bravocpas.com (Eduardo Bravo Losada) — Tue, 23 Jan 2007 10:26:00 +0000

Argentina achieved record exports of $46.6 billion last year, according to figures released by the economy ministry. The 15% annual increase in sales led to an increase in the trade surplus to $12.4 billion, despite the 19% rise in imports to $34.2 billion. GDP growth of around 9% helped drive up the demand for capital goods imports, said the ministry.

S&P Lowers Ecuador Rating To CCC

ebravo@bravocpas.com (Eduardo Bravo Losada) — Mon, 22 Jan 2007 10:47:00 +0000

Ratings agency Standard & Poor’s has lowered Ecuador’s long-term sovereign credit rating to CCC from CCC+ and revised its outlook on the rating to negative from stable. The short-term sovereign credit rating remains C. S&P said its rating action reflected “repeated policy signals by the new administration that indicate significant downside risk to timely debt service on its US$3.86 billion of outstanding global bonds”. Ecuador is due to pay a $135 million coupon on its global 2030s on February 15 (with a 30-day grace period). S&P added that the rating could be downgraded further should the coupon payment be missed and should the government suggest the coupon will not be paid “during the grace period or if an exchange offer is put to investors”.

Argentina Economy Expands 8.5%

ebravo@bravocpas.com (Eduardo Bravo Losada) — Fri, 19 Jan 2007 07:14:00 +0000

Argentina’s economy grew by 8.5% between January and November last year, according to the government. Year on year, the economy expanded by 8.6% in November, driven by construction and industrial production and rose 0.6% on a monthly basis.

Bolivia Seeks Full Mercosur Membership

ebravo@bravocpas.com (Eduardo Bravo Losada) — Fri, 19 Jan 2007 07:12:00 +0000

Bolivia has requested full membership of regional trade bloc Mercosur. However, President Evo Morales, speaking at a press conference in Rio de Janeiro, made it clear that Bolivia would push for changes to ensure that such trading blocs benefit the ordinary people, and not just the business community, in member countries. Bolivia’s application to join, sent to the member countries, currently meeting at a Mercosur summit in Brazil - if approved - will make Bolivia the bloc’s sixth member. Venezuela joined last year. Mercosur member countries comprise Argentina, Brazil, Paraguay, Uruguay, Venezuela; associate members are Bolivia, Chile, Colombia and Ecuador.

Moody’s Improves Ratings Outlook For Argentina Local Government

ebravo@bravocpas.com (Eduardo Bravo Losada) — Thu, 18 Jan 2007 06:12:00 +0000

Moody's Investors Service has changed the rating outlook to positive, from stable, for two local governments in Argentina. The agency said the action was prompted by a similar, recent, outlook change for Argentina’s B2 foreign currency country ceiling for bonds. The governments and ratings affected are: City of Buenos Aires foreign currency bonds rated B2 (global scale) and Aa3.ar (Argentina national scale). Both were assigned a positive outlook; these ratings are constrained by Argentina's foreign currency country ceiling. The outlook for domestic currency bonds rated B1 and Aa2.ar remains stable, said the agency. Meanwhile, Province of Mendoza foreign currency bonds due September 2018 rated B2 (global scale) were assigned a positive outlook; this rating is constrained by Argentina's foreign currency country ceiling. The outlook for the province's domestic currency issuer ratings of B1 (global scale) and Aa3.ar (Argentina national scale), as well as for its foreign currency bonds due September 2018 rated Aa3.ar (Argentina national scale), remains stable.

Moody’s Improves Argentina Outlook

ebravo@bravocpas.com (Eduardo Bravo Losada) — Wed, 17 Jan 2007 07:43:00 +0000

Moody’s Investors Service has raised the outlook on its B3 foreign- and local-currency rating of Argentina’s sovereign bonds from stable to positive. The change was due to “continued improvement in the fiscal accounts that, combined with robust economic growth and substantial accumulation of international reserves, has contributed to strengthening the government's overall credit profile and to reducing external vulnerabilities”, according to Moody’s. An outlook change to positive from stable was also made to Argentina’s B2 foreign currency country ceiling for bonds and to the Caa1 ceiling for foreign currency bank deposits. Unaffected by the rating action is Argentina’s Ba1 local currency bond ceiling, the highest possible rating that could be assigned to obligors and obligations denominated in local currency within the country remains stable, as well as the Ba1 local currency deposit ceiling.