Brazil

Workers in Brazil’s automotive industry have become accustomed to seeing their sector break new records, with Latin America’s biggest country becoming the fourth largest car producer in the world over the past decade, the Financial Times reported. But last week, 930 employees at General Motors’ plant in São José dos Campos near São Paulo were forced to accept a five-month “lay-off” or suspension to avoid outright dismissals.

The Brazilian government on Wednesday announced measures aimed at increasing bank lending, including granting banks permission to issue home-equity loans, The Wall Street Journal reported. The measures also include reducing documentation for mortgages and streamlining the process to seize loan collateral. "Credit supply is running very low. The new measures will create conditions for the banks to offer more loans," Finance Minister Guido Mantega told reporters after the announcement.

Brazil's Oleo e Gas Participacoes SA, the bankrupt oil company controlled by Eike Batista, said yesterday that Brazilian buyout firm Cambuhy Investimentos bought shares worth 199.9 million reais ($87 million) that it held in Parnaíba Gás Natural, formerly known as OGX Maranhão, Reuters reported yesterday. The 245,728,660 shares were auctioned on Wednesday, the company said in a securities filing. Parnaíba was separated from OGX in October in an operation that generated 344 million reais, which was crucial for the survival of Batista's oil company.

Banco Espirito Santo (BES) could be sued over a loan that one of its founding family's holding companies failed to repay to Portugal Telecom, sources said on Thursday, as credit rating agencies downgraded the bank and its key shareholder. Still, Finance Minister Maria Luis Albuquerque said the problems faced by BES, Portugal's largest listed bank, and the family's Espirito Santo Group did not pose an imminent danger to the country's financial system and reiterated the government did not plan to use public funds to help the bank.

A Florida federal bankruptcy judge on Tuesday approved Brazilian bank Banco Cruzeiro do Sul SA's petition for Chapter 15 bankruptcy, a decision that will provide the bank some protection in United States courts while it continues its primary insolvency proceedings in Brazil, Law360 reported. U.S. District Court Bankruptcy Judge Laurel M. Isicoff granted recognition to the bank's petition for Chapter 15 bankruptcy, which was filed on June 5, saying that the bank's foreign representative, Eduardo Felix Bianchini, is qualified and granting the bank protection in U.S. courts.

Some large shareholders in Grupo Oi SA could sue partner Portugal Telecom SA if a debt investment made by the latter ends up in default, which could delay the companies' planned merger, a source close to the deal said, Reuters reported. Shareholders of Rio de Janeiro-based Oi want to push Portugal Telecom to take a smaller stake in the company resulting from the merger, depending on the outcome of the debt negotiations later on Tuesday, said the source, who declined to be identified because of the sensitivity of the issue.

A Netherlands-based subsidiary of Brazilian tycoon Eike Batista's bankrupt shipbuilding and shipleasing unit OSX Brasil SA suspended payments to creditors after being granted protection by a Dutch court, Reuters reported. According to a securities filing on Thursday, OSX sought protection for its OSX WHP 1&2 Leasing BV unit after an unnamed "alleged creditor" asked a court to order payment in a way that threatened OSX's obligations to other creditors.

State-run Caixa Econômica Federa l, Brazil's largest mortgage lender, is considering options to get rid of bad loans and free up capital, including the sale of pools of distressed credit to investors, two sources said on Wednesday, Reuters reported. Up to 3.2 billion reais ($1.4 billion) worth of defaulted loans could be sold to funds that specialize in dealing with distressed assets, the sources said. Alternatives under study include the sale of securities backed by pools of bad loans, according to the first source, who declined to be identified because the matter has yet to be decided.

Brazil plans to sell billions of dollars worth of offshore oil rights to state-run oil company Petrobras, a move expected to saddle the company with new costs even as its debt soars and it struggles to meet existing production targets, Reuters reported. Shares of Petroleo Brasileiro SA, as Petrobras is formally known, fell in Sao Paulo trading on Tuesday. Preferred shares, its most-traded class of stock, slipped 3.9 percent to a nearly three-week low.

A judge approved a restructuring plan for Oleo e Gas Participacoes SA, the oil company controlled by Brazilian tycoon Eike Batista, according to a statement by the Rio de Janeiro court that heard the bankruptcy proceedings, Reuters reported. The court's approval grants a quick and expected resolution to the largest bankruptcy in Latin America's history. Creditors of the company, formerly known as OGX Petroleo e Gas Participacoes SA, approved the plan on June 3. Holders of 90 percent of the Rio de Janeiro-based company's nearly 12 billion reais ($5.4 billion) in debt agreed to the plan.