Venezuela Weekly Report
• The National Constituent Assembly (ANC in Spanish) will assume the “legislative power to preserve the peace and institutionality”, although its president Delcy Rodriguez affirmed that the National Assembly “has not been dissolved” and must coexist with the ANC
• Crystallex filed a Writ of Attachment to request the seizing of the shares of PDV Holding, US subsidiary of PDVSA and owner of CITGO
• International reserves hit new minimums this week, while as of 17 August these register a 17.72% y-o-y fall
The National Constituent Assembly (ANC in Spanish) approved a decree that empowers the ANC to legislate in those matters concerning “the guarantee of peace and institutionality”, as well as those involving the stability of the “socioeconomic and financial system”. Without further disclosure of the extent of the decree, the president of the ANC and former Chancellor Delcy Rodriguez affirmed that this decree “does not dissolve” the National Assembly (AN in Spanish) – dominated by the opposition –, but rather instructs them to subordinate to the ANC while also makes a call for the coexistence of both ANC and AN.
Argentina Weekly Report
- The national CPI result for August 2017 stood at 1.4% m-o-m, confirming a deceleration trend for the end of the year. By then, it is expected to reach a monthly inflation of 1% in order to achieve 2018 inflationary goal
- On the Fixed Income arena, the government of Jujuy issued a “green bond” for USD210mn with a 5-year maturity and a coupon rate of 8.625%
- Likewise, Finance Ministry Luis Caputo announced that, given the current scenario, they do not discard a new bond issuance before the mid-term elections. This issuance could be denominated in EUR, CHF, JPY or a mix of currencies
This week, the long-awaited news arrived to confirm that the government’s policies have resulted in routing inflation to the desired target and that the FX movements did not cause the so fear “pass-through” effect. However, this is still not enough reason for the Central Bank of Argentina to ease its actions with the key monetary policy rate.
Dominican Republic Bi-Weekly Report
• The economic activity expanded 4.0% y-o-y in 1H17 due to a lower than expected GDP result in the second quarter of the year
• The government has executed 46.7% of the 2017 Budget plan while incomes rose 1% above estimations on account of a higher tax collection
• We expect the loosened monetary policy to add dynamism to economy in the short-term, though fulfilling the inflation target could be uphill
Economic performance continues to show signs of decelerating in the second quarter of 2017, as the Central Bank of the Dominican Republic (BCRD in Spanish) reported that the Monthly Indicator of Economic Activity (IMAE in Spanish) recorded an increase of 2.7% in April-June of this year. This result put the accumulated figure at 4% y-o-y in 1H17, significantly lower than the 7.4% y-o-y growth reached in June 2016. The economic activities with the greatest impact in the period January-June 2017 were: Hotels, Bars and Restaurants, Agriculture, Transportation and Storage, Financial Intermediation, Insurance and Related Activities and Commerce.
Andean, Central America, & Caribbean Weekly Report
- Moody’s affirmed Peru’s “A3” rating and a “stable” outlook, but we believe that the economic prospects could continue improving and thus signal towards better ratings in the short and mid-term
- GDP grew 3.64% y-o-y in June while the YTD figure rose 2.3% y-o-y. In our view, considering the reconstruction works after El Niño and those for the Panamerican Games of 2019, economic activity could pick up even further to grow 3% by year-end
- Y-o-y inflation stood at 3.37%, above the 1%-3% official goal. Nonetheless, we recommend being watchful of possible stimulus measures that could further prop up inflation
Credit rating agency Moody’s decided to affirm Peru’s credit rating at “A3” as well as the “stable” outlook, taking into account that the economy has been able to recover importantly after suffering the impact of negative shocks as the spillover of the Odebrecht scandal and even the worse-than-expected climatic phenomenon of “Coastal El Niño”. An additional positive factor considered by Moody’s refers to the enhancement of the fiscal accounts, which now count with a renewed credibility that does nothing but add to the outlook of a resilient macroeconomic stability.
Ecuador Bi-Weekly Report
- The economy expanded 0.19% y-o-y in June while total tax collection spiked 13% y-o-y in July, thus making a serious case for economic recovery
- The Attorney General moves forward to prosecute VP Glas on alleged corruption cases, setting up a new battle within the ruling party “Alianza Pais”
- The Esmeraldas Refinery is shut down for 45 days while Oil Minister reaffirmed Ecuador’s commitment with OPEC at leaving oil output at 541k bbl/d
The Monthly Economic Activity Index (IDEAC in Spanish) expanded 0.19% y-o-y in June while on the trend-cycle data series -which adjusts for seasonality and historical irregularities- the indicator registered a 6.12% y-o-y increase, per a report released earlier this week by the Central Bank of Ecuador (BCE in Spanish). In YTD terms, the Ecuadorian economy accumulates a 2.9% increase. These new figures have come to reinforce our view that the Andean nation is on track to recovery yet to a weak one; reason why we believe that upcoming economic measures by the Moreno’s administration will be paramount to strengthen -or weaken- such recovery.
Corporate Weeky Report
- Last July, Pampa Energia finished the acquisition process for Petrobras Argentina S.A, turning it into the largest private energy company in Argentina
- Currently away from top positions, Pampa is likely to improve in its market share position for both oil and gas by next year, once the merge with Petrobras is totally complete
- An upcoming issuance, which is set to repay a bridge loan which permitted the acquisition of Petrobras, is expected to be of USD600mn, which would be the largest issuance of the company
Pampa Energia S.A. is one of the principal energy companies in Argentina and through its subsidiaries manages to participate in all stages of the electricity activity, from exploration and production to distribution. Its activities are separated over three different segments: generation, transmission and distribution. Moreover, the company has participation in production and distribution of general gas. Just to set an example, through Edenor in the distribution segment, Pampa has an important participation in the Argentine market with an estimate 21% of participation in the whole supply of electricity.