Rabobank joins DFIs in $100m Argentina citrus company loan

In early December, Rabobank teamed with a pair of developmental finance institutions to offer a $100 million loan to San Miguel, an Argentinian citrus producer focused on export markets.

The International Finance Corporation, the World Bank’s private sector arm, and Inter-American Development Bank’s IDB Invest unit each contributed $27.5 million to the facility, which was supplemented by $45 million from Rabobank.

Offered on a term of up to nine years, the loan will support San Miguel’s $132.5 million investment plan and its employment of 4,500 people in Argentina’s Northwestern province of Tucuman.

Headquartered in Buenos Aires, San Miguel primarily produces lemons on the 10,000 hectares it operates throughout Argentina, Uruguay, Peru and South Africa. The company’s offerings also include oranges, table grapes and avocados in addition to value-added citrus products. San Miguel has more than 260 customers in 80 countries.

Last January, Rabobank and the IFC partnered with Natixis and other lenders to offer a $295 million financing package for Vicentine, an Argentinian agribusiness focused on the processing and export of soybean oil.

At the time, the IFC’s head of syndication for Latin America told Agri Investor that such support from DFIs had influenced sentiment surrounding Argentina’s agribusiness sector, which he described then as gradually improving since the 2015 election of President Mauricio Macri.

However, San Miguel chief financial officer Patricio Aguirre Saravia told Agri Investor Thursday that over about the past eight months, several factors have conspired to produce more challenging borrowing conditions for agribusinesses in Argentina.

According to Saravia, a combination of a strengthening peso, inflation and high tax and labor costs have helped generally reduce liquidity recently. Though short-term debt has remained available, said Saravia, long-term financing such as that provided by Rabobank, IFC and IDB has become harder to come by.

Because San Miguel owns and manages its own farms and plantations and has long-term plans that include the construction of more processing facilities, this lack of long-term capital has been very challenging, he said.

While San Miguel’s status as a public company does provide some access to capital, Saravia explained, because the overall stock market in Argentina is fairly small, listing on it does not provide a reliable source of capital for the company.

Saravia declined to disclose the interest rate on the loan arranged by Rabobank, adding only that it was competitive with the local market and below rates offered by private lenders increasingly active in the region.