North America

The Canada Pension Plan Investment Board (CPPIB) was the unlucky recent buyer of a 5 percent stake in SolarWinds, the Texas-based business software maker that was compromised by a far-reaching Russian espionage attack discovered this month, the Washington Post reported. The largest shareholders in SolarWinds agreed to sell CPPIB the stake for $315 million on Dec. 7, just days before tech company’s public disclosure of the hack crushed its stock price more than 20 percent.

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Grupo Aeromexico has wound up discussions with two labor unions but remains in talks with two more, it said yesterday in an update on negotiations that are a requirement for the airline to receive a second tranche of bankruptcy financing, Reuters reported. Aeromexico filed for chapter 11 protection in a U.S. court in June, after the coronavirus pandemic slammed the global travel industry. The carrier was approved for up to $1 billion in debtor-in-possession (DIP) financing, and received an initial $100 million payment in September.

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Mexico will likely approve a bill making the central bank the nation’s dollar buyer of last resort following changes that will ease concerns it could force the institution to take illicit funds, a top senator said, Bloomberg News reported. Lawmakers will hammer out details with central bank and finance ministry officials in January, clearing the way for the lower house to approve the proposal in February, Senator Alejandro Armenta said. If the bill is modified, the senate would have to hold a final vote before it becomes law.

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Latin America’s luck will change. Pandemic lockdowns caused more regional corporations to default between early May and June. But yield-starved investors will ignore some of these risks, Reuters reported. There’s a lot of bad news to ignore. The International Monetary Fund expects Latin American and Caribbean economies to contract by more than 8% in 2020, the most of any region, with only a 3.6% improvement in 2021. And non-financial companies with foreign debt have seen revenue dented by a combined $200 billion due to the pandemic, Fitch Ratings estimates.

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Canada on Thursday temporarily waived a C$844 million ($664 million) debt payment for the construction of Newfoundland and Labrador’s Muskrat Falls hydroelectric power plant, bailing out a troubled project in a province already laden with debt, Reuters. Since the announcement of the project in 2010, Canada has guaranteed a total of C$7.9 billion in debt for the project, which has faced major cost over-runs and now represents a large portion of the remote and sparsely-populated Atlantic province’s overall debt.

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Cuba’s already cash-strapped economy shrank 11% in 2020 due to the pandemic, tougher U.S. sanctions and domestic inefficiencies, Economy Minister Alejandro Gil said on Thursday, forecasting 6% to 7% growth for next year, Reuters reported. Addressing a year-end session of the Communist-run country’s parliament, Gil said it would take the next two years for the state-run economy to recover from this year’s sharp contraction.

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The United States and United Kingdom subsidiaries of Montreal-based flexible workspace company Breather have reportedly filed for separate insolvency processes, amid financial troubles and significant downsizing happening at the startup, BetaKit reported. According to The Globe and Mail, the subsidiaries filed for insolvency this week, around the same time Breather decided to pull out of hundreds of leases. The 315 office spaces Breather leased in the US and 40 in the UK will be assigned to third parties to “wind them down” and repay creditors.

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Dominion Diamond Mines ULC said on Monday it reached a deal to sell its Ekati mine in Canada’s Northwest Territories to holders of its second lien notes, eight months after seeking bankruptcy protection amid a worldwide upheaval in the diamond industry, Reuters reported. Closely held Dominion, owned by the Washington Companies, filed for creditor protection in April, citing disruption to the global diamond trade caused by the novel coronavirus pandemic.

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Global Debt to Hit $200 Trillion

Global debt is set to reach $200 trillion, or 265% of the world’s annual economic output, by the end of the year, S&P Global has forecast - although it doesn’t expect a crisis any time soon, Reuters reported. The credit ratings giant said it amounted to a 14-point rise as a percentage of world GDP, having been amplified by both the economic plunge caused by COVID and the extra borrowing that governments, firms and households have had to resort to. “Global debt-to-GDP has been trending up for many years; the pandemic simply exacerbated the rise,” S&P’s report said.

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Bank of Nova Scotia and Bank of Montreal (BMO) beat analysts’ estimates for fourth-quarter profit as they set aside less funds than expected to cover potential loan losses due to the COVID-19 pandemic, Reuters reported. Canadian banks have braced for higher loan losses this year and 2021 as the pandemic ravages the global economy and leads to lower household income, with a plunge in oil prices also likely to result in higher defaults in the energy sector. Both banks reporting on Tuesday, however, put aside far less than analysts had expected in the quarter to Oct.

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