MercoPress. South Atlantic News Agency

Mercosur car industry agreement.

The disputed Mercosur Automobile Policy, PAM, which will extend for the next five years will be formally signed by the blocks full members during the coming presidential summit in southern Brazil.

After months of deliberations, frustrations and deadlocks over "components" definition and content, Argentina and Brazil finally defined the terms of the complementation automobile industry that represents almost 25% of intra Mercosur trade and is scheduled to become an only and open market by January 2006.

PAM establishes that the extra zone content of vehicles manufactured in Mercosur is limited to 44%. Auto parts and assembly plants are allowed to calculate this figure on a component by component maximum of 30% for cars and 25% for other vehicles (trucks, vans, tractors, etc.); or on a 44% "in process basis" (global) for cars and 37% for the second category.

Uruguay particularly, that has three local assembly plants, has been promised a 70 million US dollars annual sales quota to the Brazilian market and is negotiating similar terms with Argentina.

"We're optimistic, discussions have been undertaken with a more flexible and comprehensive spirit", said Uruguayan Industry, Trade and Mining Minister, Sergio Abreu.

Uruguayan bonds in Chilean pesos.

For the first time in history, a Latinamerican country has floated bonds in another regional country's currency. The event involves Uruguay and Chile, with Uruguayan six year government bonds in Chilean pesos equivalent to 142 million US dollars.

The other big news in stormy financial times for Latinamerica, is that the rate was just 100 points above the current Chilean "official" rate of 6%, that is bonds will yield 7%.

The success of the operation is credited to the fact that both Chile and Uruguay hold acceptable investment grades according to Wall Streer risk agencies.

However in spite of the nomination in Chilean pesos, the bonds will actually be adjusted to Chile's UF (Unidad de Fomento), which is an index that includes the country's inflation rate and is equivalent to a US Treasury Bonds 330 points spread.

Uruguayan ten year bonds had a 300 points spread in the previous 300 million US dollars operation in New York