EM LATAM CREDIT: Argentina's Province of Mendoza (MENDOZ; Caa2/B-/NR) Update

“Argentina Allows Banks to Buy ARS224.6B ($210.7 million) in Mendoza Notes” – BBG

Neutral for bond prices

• The Province of Mendoza has about USD113mn due this year on their 2029 bonds from sinking fund principal payments and coupon interest.

• Provinces have generally been financing themselves in the local bond market but at some point soon may be viewed as strong enough to issue internationally.

• The Federal government’s cutback in transfer payments to provinces has caused local governments to reduce fiscal expenses and capital expenditures.

• As of 2023 the Province of Mendoza had about USD260bn in USD holdings to pay a little over USD 100mn in 2024 bond payments, according to S&P.

• The Province of Mendoza main export is wine, with over 70% of Argentina’s production. 20% of the province’s GDP comes from oil and gas production and occupies a minority portion of the Vaca Muerta shale formation, according to Grant Thornton.