Daily Insolvency News Headlines

Fri., April 17, 2015

Fri., April 17, 2015

Greek officials have made an informal approach to the International Monetary Fund to delay repayments of loans to the international lender, highlighting the parlous state of Greek finances, but were told that no rescheduling was possible, the Financial Times reported. According to officials briefed on the talks by both sides, Athens was persuaded not to make a specific request for a delay to the Fund, which is owed almost €1bn in two separate payments due in May. Although Athens was rebuffed, the discussions, which occurred in private earlier this month, are a sign that the Greek government is finding it increasingly difficult to scrape together enough money to continue to pay wages and pensions while meeting its debt payments to external lenders. Yields on Greek bonds soared on Thursday following the news, with yields on three-year paper rising 134 basis points to 25.10 per cent, the highest since the country’s restructuring. Its 10-year yields climbed 45 basis points to 12.18 per cent. Officials representing Greece’s creditors are unsure whether Athens will be able to make the payments in May. Even if they do, they are certain that the matter will come to a head by June, before much larger payments on bonds held by the ECB start coming due. Read more. (Subscription required.)

Fri., April 17, 2015

In a related story, The Wall Street Journal reported that Europe is losing hope that Greece will adopt the economic policies needed to unlock bailout funds before it runs out of money. Policy makers across the euro currency zone are bracing themselves for brinkmanship in coming weeks that could lead to a resolution—of one kind or another—but only in the face of further political and financial turmoil in Greece. “Greece is moving ever closer to the abyss,” Slovakia’s Finance Minister Peter Kazimir said this week. Financial markets seem to agree: Yields on Greece’s three-year bonds shot up to nearly 28% on Thursday as investors priced in a high chance of default. The eurozone usually avoids the abyss at the last minute through what it does best: political fudges. But the gap between Greece’s antiausterity government, led by the leftist Syriza party, and the country’s creditors, led by fiscally conservative Germany, is so big that even a fudge would require spectacular U-turns by one or both sides. The impasse is the “logical culmination” of a deeply troubled Greek bailout program “that was never politically sustainable,” says Gabriel Sterne, head of global research at consultancy Oxford Economics. Read more. (Subscription required.)

Fri., April 17, 2015

Forty-three percent of companies in Colombia's oil sector are at high risk of going bankrupt as the industry reels from the recent halving of oil prices, according to a survey presented to the Andean country's congress this week, Reuters reported. The survey by the Colombia's companies' regulator polled 53 companies with total assets of about $10 billion but it did not include state-run oil producer Ecopetrol or two Toronto-listed companies, Pacific Rubiales Energy Corp and Canacol Energy Ltd. The regulator did not say why those three companies were excluded, but they are some of the largest operators in Colombia and publicly listed. All of the companies surveyed that were not at high risk of bankruptcy were ranked medium risk, while none were classified as low risk. Two surveyed firms were later excluded from the results after entering liquidation. Colombia is Latin America's fourth-biggest oil producer with production of about 1 million barrels per day. Read more.

Fri., April 17, 2015

Ukraine plans to tell investors on Friday that it will allow a state-owned bank to default unless a deal with creditors can be agreed as the embattled country takes an ever tougher approach to debt negotiations, the Financial Times reported. While attending International Monetary Fund meetings in Washington, Ukraine’s minister of finance Natalie Jaresko will probably say that a three-month extension on debt issued by Ukreximbank is crucial to the success of the country’s sovereign-debt restructuring. However, the negotiations are being complicated by a small number of investors who are holding out for full repayment and may have a sufficient stake to block a deal, according to a person familiar with the situation. The move reflects how high the stakes have become in Ukraine’s debt operations as it seeks to save $15.3bn over the next four years in order to meet the terms of a multibillion-dollar bailout by the IMF. Fresh fighting between government troops and Russian-backed forces in parts of eastern Ukraine this week has aroused concerns that the latest ceasefire signed in Minsk in February could be unravelling. Investors fear that with foreign reserves dwindling, Kiev is swiftly headed towards bankruptcy unless a deal with creditors is reached. Read more. (Subscription required.)

Fri., April 17, 2015

Art work and office buildings are being sold by bankruptcy receivers for the Espirito Santo group of companies that collapsed last year amid fraud allegations, The Wall Street Journal reported. The 36-story Espírito Santo Plaza in Miami went on the block in April after Luxembourg officials managing the bankrupt companies hired Florida’s EXAN Capital to manage the sale. The office and condominium tower, located in Miami’s Brickell Avenue financial district, is expected to fetch at least $120 million based on market prices. The proceeds of the sale will go to creditors of Espírito Santo International SA, the top holding company of the former Espírito Santo empire that spanned banking, real estate, health care and energy, and its subsidiaries. Read more. (Subscription required.)

Fri., April 17, 2015

A reorganization plan to help oil rig supplier Sete Brasil Participações SA remain in business should be ready by the end of June, after shareholders and creditors agreed to extend financing as credit dried up, the president of Brazil's state development bank BNDES said on Thursday. Last week, commercial banks signed a memorandum of understanding to avert demanding repayment of as much as 11 billion reais ($3.7 billion) in loans to Sete Brasil that matured this month, extending them for a further 90 days. The decision was aimed at helping the ailing oil rig supplier to come up with alternatives to stay current on its debts and afloat, BNDES President Luciano Coutinho said at a congressional hearing. Coutinho was summoned to speak about BNDES' exposure to Sete Brasil. "We hope that until then, that is June 30, a rational solution is defined so we can give continuity to the Sete Brasil project," Coutinho told lawmakers. Coutinho was named this month chairman of state-controlled oil producer Petróleo Brasileiro SA, or Petrobras, on an acting basis. Sete Brasil is seeking BNDES funding to avoid a technical default that could accelerate payments on more than 13 billion reais of debt. Read more.

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