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Argentina creates external debt unit, economy bill moves to Senate – Financial Post



BUENOS AIRES — Argentina appointed a government team to kick off talks with creditors to renegotiate about $100 billion in sovereign debt as the new center-left administration of President Alberto Fernandez postponed payments on some of its short-term debt.

The “external debt sustainability management unit” was created in the context of the government’s sweeping economic bill, expected to be passed by the Senate later on Friday, according to a statement by the Secretariat of Finance.

The secretariat said it was inviting financial institutions and advisers to be part of a process that would allow “the recovery of external public debt sustainability.”

Fernandez, inaugurated Dec. 10, inherits an economic crisis, including annual inflation of more than 50% and an economy that is expected to contract for a third straight year in 2020. In addition to trying to get the economy back on track, the government must steer debt revamp talks with bondholders and other creditors, including the International Monetary Fund.

Earlier on Friday, after 20 hours of debate, Argentina’s lower House approved the government’s economic plan, which includes an array of tax increases on grains exports, personal property and foreign assets held abroad.

The Senate was expected to pass the measure, dubbed the “Social Solidarity and Production Reactivation,” Friday night.

The cornerstone of Fernandez’s program, the law aims to maintain fiscal balance to guarantee the future payment of public debt and, at the same time, expand social spending to boost the economy as Argentina struggles with higher poverty and increased unemployment.

Also on Friday, the government said it would postpone payments on some short-term notes known as “Letes” until Aug. 31, 2020. About $9 billion in such payments due to expire from Friday would be affected, according to a government source.

The postponement did not come as a surprise, according to Nikhil Sanghani, a London-based economist at Capital Economics, but longer-term concerns still linger for investors.

“The government has merely kicked the can down the road and maturity extensions alone will not be enough to resolve the debt problem. We think that it will have to pursue a large debt write-down next year,” Sanghani said.

Fitch downgraded Argentina to ‘RD,’ or “Restricted Default,” a credit rating applied to borrowers that have defaulted on one or more of its commitments while to continuing to meet others.

(Reporting by Walter Bianchi, Cassandra Garrison, Hugh Bronstein, Eliana Raszewski and Nicolas Misculin; additional reporting by Rodrigo Campos in New York; Editing by Alison Williams, Steve Orlofsky, Dan Grebler and Richard Chang)

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Canadian retail sales slide in April, May as COVID-19 shutdown bites



december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

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Canadian dollar notches a 6-day high



Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

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Toronto Stock Exchange higher at open as energy stocks gain



Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

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