South America

Argentina’s creditors have approached several international organizations to seek endorsement for a proposal to change the rules that govern some of the country’s overseas securities, according to people familiar with the matter, Bloomberg News reported. The International Monetary Fund, the U.S. Treasury, the International Capital Market Association and the Institute of International Finance are among the organizations that have been informally approached by bondholders, said the people, who asked not to be identified discussing a private matter.

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LATAM Airlines will fire “at least” 2,700 workers in Brazil, including pilots, its Brazilian arm said on Saturday, as the bankrupt carrier struggles to cut costs and cope with an industry collapse due to the COVID-19 pandemic, Reuters reported. In a statement, LATAM Brasil said it opened a voluntary redundancy process on Friday which will run through Aug. 4, after which a further minimum 2,700 jobs will be cut. The announcement followed the breakdown in talks with the SNA union over workers’ pay, the statement said. O Globo and O Estado de S.

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Argentina economy minister Martin Guzman emphasized on Thursday that the country’s proposal to creditors to restructure around $65 billion in foreign debt was the maximum effort it could make, and hinted the deadline for a deal could be extended, Reuters reported The South American nation is racing to clinch a deal to avoid a messy and protracted legal standoff with creditors after it slipped into default for the ninth time in May. The deadline for a deal set by the government is currently Aug. 4.

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Ecuador will extend the deadline for creditors to vote on its $17.4 billion debt restructuring plan to Monday following a lawsuit by a small group of bondholders, the finance ministry said on Thursday, Reuters reported. The South American nation originally said the vote would end on Friday, but pushed the deadline back at the request of the U.S. Court for the Southern District of New York following a suit by investment funds Contrarian Capital Management and GMO.

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Argentina’s government is considering pushing back a deadline for creditors to respond to its foreign debt restructuring proposal until mid-to-late August, a source close to the negotiations told Reuters on Wednesday, Reuters reported. The cutoff for the $65 billion deal is currently Aug. 4, though the two sides are at an impasse over the value and legal terms of the final offer, with a large group of creditors rallying behind a counter proposal.

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Argentina will seek a new program with the International Monetary Fund whatever the outcome of talks with holders of its $65 billion of defaulted overseas bonds, Economy minister Martin Guzman said, Bloomberg News reported. Guzman also reiterated that the country has reached the upper limit in what it’s prepared to offer creditors, though said the government would consider improving the legal terms of the offer.

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Argentina’s main bondholder groups say they now represent more than 50% of the country’s overseas debt, potentially strengthening their bargaining power at a crucial time in the country’s bond restructuring, Bloomberg News reported. A group of creditors seeking to extract better terms from the government in its $65 billion debt restructuring says they have added large funds to their bloc, according to people with direct knowledge of the matter.

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Argentina has lost an attempt to halt a lawsuit in English courts brought by four hedge funds which say the country has manipulated economic data to avert payments in connection with growth-linked sovereign debt instruments, Reuters reported. Asset managers Palladian Partners L.P., HBK Master Fund L.P, Hirsh Group LLC and Virtual Emerald International Limited said they are owed from 525 million-645 million euros in payments linked to the GDP warrants designed to pay out to investors if a number of growth criteria targets are met or exceeded.

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Latin America is at the centre of the coronavirus pandemic, suffering some of the worst infection rates and highest death tolls in the world, the Financial Times reported. Now economists warn that the region faces more bad news: its sickly economies risk falling into a new debt crisis even worse than the last big bust of the 1980s. The continent was struggling with multiple “pre-existing conditions” before the virus took hold: anaemic growth, weak health systems, low tax revenues, high levels of borrowing and an over-reliance on commodity exports.

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Ecuador pushed forward with its debt overhaul plans on Monday, requesting a vote among its creditors on reconfiguring the terms of $17.4 billion of its external bonds, with its largest group of creditors backing the proposal, Reuters reported. Under the proposed deal - unchanged from the government’s earlier proposal - 10 existing bonds maturing between 2022 and 2030 would be swapped for three bonds due in 2030, 2035 and 2040, as well as a past due interest bond maturing in 2030.

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