Mondelez's expansion timing in the some of the developing countries couldn't have been worse. Argentina, Brasil and Egypt are creating big problems as of late.
They have made major expansions in Brasil and Argentina and because of the local currency their costs are outlandish. The governments are the big stumbling locks.
The following WSJ article explains part of the problem. To put it in a real life situation I offer the following. One of our divisions supplied major components over a year ago to Mdlz in Argentina. Mondelez can not pay us directly because they have to wire the money to the government which then forwards it to us. Monelez paid the proper sums 13 months ago and as of today the swift has not reached us.
Now the gov is slowing it down the other way. We Air Freighted components to Mdlz before thanksgiving and it has not clear customs yet.
WSJ
For Venezuela, Bonds Create a Bind
By KEJAL VYAS
Feb. 12, 2014 7:07 p.m. ET
CARACAS, Venezuela—When it comes to choosing between its own people and Wall Street, Venezuela's socialist government has picked the latter—at least in regard to allocating foreign currency.
The oil-rich country pays its overseas bondholders right on time. But the cash-strapped government is in hock to the tune of $50 billion to the private companies that service its economy.
They range from oil contractors and airlines to supermarkets that need dollars to import everything from flour to toilet paper. The delays in foreign-currency payments to the private sector come as the government intensifies foreign-exchange controls adopted more than a decade ago by the late populist leader Hugo Chávez, who sought to contain rising dollar demand in an economy that depends on imports. The result: widespread shortages of basic goods.
The situation is ironic for a government that has regularly railed against capitalism, first under Mr. Chavez and now under his successor, Nicolás Maduro
"They've foregone paying private companies because they feel the cost of not doing so is manageable, but they've continued paying the bonds," said Asdrubal Oliveros, head of consultancy Ecoanalitica. He refers to it as a "selective default." "The people suffer consequences of the shortages," Mr. Oliveros added.
Bond funds investing in the country's debt earn the highest yields available on J.P. Morgan's Emerging Market Bond Index Global, even higher than countries like Argentina and Ecuador, which unlike Venezuela, have defaulted in the past. Venezuelan bonds on the index yield more than 16% on average, compared with less than 11% for troubled Ukraine. "For a long time, people saw Venezuela as a risk-free asset where they could park their money and pick up yield," said Credit Suisse analyst Casey Reckman.
Any default on its more than $60 billion in bonds would turn the nation into an international pariah, cutting it off from loans it needs to run its oil industry, which provides 96% of Venezuela's hard-currency earnings.
So while bondholders are paid, many companies in Venezuela aren't.
The overdue tab to private companies includes $14 billion owed to partners and contractors in the oil industry, $9 billion to importers and more than $4 billion to services companies like airlines, Ecoanalitica estimates. There also are more than $10 billion in profits that foreign companies have wanted to convert from bolívares to dollars but have been unable to since 2008. Debts with companies have ballooned sevenfold since 2008.
Factories have been hard hit, with auto assembly down nearly 85% in January from the same month in 2013, according to the chamber representing car plants. For example, Toyota Motor Corp.'s Venezuela unit has said it is temporarily shutting down operations Thursday because it can't get parts.
News that Toyota would close prompted Mr. Maduro to accuse Toyota of "political motives" in a speech last weekend. "The only thing these little managers want is dollars, dollars and more dollars," he said. Toyota representatives in Venezuela couldn't be reached for comment.
The ultimate losers, say economists, are ordinary Venezuelans who scour the city looking for baby formula and chicken in an economy where one in four goods is missing from store shelves because the government won't hand out enough dollars.
Antonio Gonzalez, who buys wholesale supplies for a Caracas bakery, said he sees fights break out frequently between customers at markets scrambling for scarce goods like flour, butter and sugar. He drives around the traffic-clogged city on most days securing any ingredients he can find. "Things are actually worse now for bakers than they were last year," Mr. Gonzalez said.
In a wealthy district of the capital, shops put up signs limiting bread purchases. Shopping in supermarkets can turn into a rugby match when shipments of hard-to-find toilet paper arrive.
In the eastern part of the city, Wilmer Sanchez, who runs an auto-body shop, said he recently had to give a Toyota Corona back to its owner after it sat in his garage for a year waiting for a replacement part for its air bag, which he never found. "If you can't get the parts, what do you do?" he asked.
"Sadly, it's the lowest segment of the social strata that pays the full brunt of what is going on," said Robert Abad, an emerging-market debt portfolio manager at Western Asset Management.
Despite high oil prices, Venezuela's government has been bleeding money and estimates it lost nearly $20 billion in hard currency through fraud and corruption in its central foreign-exchange agency last year. In many cases, dollars are purchased by shell companies at the official, fixed rate of 6.3 bolívares to the dollar and then sold on the black market, where they fetch 12 times more bolívares.
Economy Vice Minister Rafael Ramirez has announced plans to cut by $3 billion the amount of subsidized dollars the state will make available to Venezuelans traveling abroad this year. The government, he said, needed to decide whether to fund travelers or imports of food and medicine. Mr. Ramirez added that debts with private companies would also need to be negotiated, offering no guarantees to pay all that companies say is owed.
He also has sought to comfort bond investors by saying that Venezuela "hasn't failed nor will it fail to comply with any of its commitments with respect to its external debt."
Still, Miguel Octavio, who manages $500 million in assets for Venezuelan clients with BBO Financial in Caracas, said he stopped investing in the country's bonds after Mr. Maduro took office. "I could tell it was going to be more state control, more of the same policies," Mr. Octavio, BBO Financial's executive director, said. "It's nice to say that you're not going to default, but two, three years down the road, when you can't even feed your own people, what are you going to do?"
Market Data 
Markets 
AI
