MIAMI, Fla. - As Miami's lazy beaches teem with Argentines weathering the crisis, Buenos Aires bankers back home are working overtime to find viable financing for exporters, the economy's main hope of survival. This is the sector everyone is looking to, not least because the country's export-backed deals have been the best performing (see ASR 9/16, p. 23).

"We're getting a lot of consultations," said Julio Pueyrredon, a partner at PricewaterhouseCoopers Argentina. "An exporter goes to a bank and they ask you for a 30% rate, but through a securitization maybe you can compete." The assets being looked at right now are the staples of Argentina's agricultural economy: beef, corn, wheat, seeds, sunflowers, and oatmeal. Forestry is attracting attention as well.

The brutal irony facing exporters right now is that they have an enormous boost from a dirt-cheap peso hovering at 3.5 to the dollar, but financing has dried up. When the local currency was pegged to the dollar one-to-one throughout the 90s, funding was abundant, but export competitiveness was lacking. In the early 20th century, Argentina was one of the most dynamic trading countries in the world and its high-quality commodities made it one of the wealthiest as well. "Historically we've been a trading nation," said Pueyrredon. But arguably misguided economic policies in the 20th century changed that. According to the Economist, trade accounted for 8% of the Argentine economy in 2000, one of the lowest figures in the world.

No one doubts that the weak peso will eventually hoist exports, but the question remains: Who will be willing to finance the sector in today's uncertain environment? The country has yet to hammer out an agreement with the IMF and presidential elections are set for March. "I don't think any (Argentine) structure would be palatable to foreign investors at the moment," said Jaime Rivera, chief operating officer at Banco Latinoamericano de Exportaciones (Bladex). "The country proved that it was willing and able to change the rules of the game at a moment's notice. It will take a while before people are ready to look at Argentina again."

Domestic buyside is a different story. "Sold to local investors, that's fine," he added. According to Fitch, Argentine pension funds are pulling in Ps70 million-Ps100 million a month.

To make export-backed notes more appetizing, Pueyrredon said the trust collecting the revenues could be foreign-based, while deals could pay out in local currency. Right now, under law, Argentine exporters outside certain categories have to liquidate all their revenues into pesos.

If Argentine banks decide to forge ahead with commodity-backed deals, they would do well to look across the continent at Colombia. Over there, domestic investors have grown comfortable with transactions backed by such agricultural goods as cattle heads and sugar. Others are soon to come out (see ASR 9/30, p. 28).

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