South America

Shunned in global financial markets, Argentina is seeking about US$5 billion for next year from multilateral organisations other than the International Monetary Fund as it negotiates a larger refinancing programme with the Washington-based lender, according to three people familiar with the plans, the Buenos Aires Times reported. Alberto Fernández’s administration is looking to institutions including the Inter-American Development Bank and the World Bank, said the people, who asked not to be named because discussions are private.

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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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The drop in the amount of distressed debt across emerging markets has been a barely anticipated bonus for many countries this year. But it’s scant comfort for those nations still struggling with mounting obligations, Bloomberg News reported. The number of emerging- and frontier-market nations with debt trading at distressed levels -- yields more than 10 percentage points above those on U.S. Treasuries -- has tumbled from as many as 19 at the height of the coronavirus selloff in March to about a half-dozen now.

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TIM Participacoes, Telefonica Brasil SA and America Movil SAB de CV’s Claro won an auction on Monday to acquire the mobile operations of Brazil’s Oi SA with a joint bid of 16.5 billion reais ($3.23 billion), the companies said in a series of securities filings, Reuters reported. The winning trio, which had submitted an initial bid in July, plans to split Oi’s assets once they have antitrust approval. Oi, which filed for bankruptcy protection in 2016, is selling assets to repay creditors. The group was the auction’s sole bidder, according to the filings.

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Argentina’s Peronist government has had a wild ride in its first year of government: a sovereign default, mammoth debt restructurings, sliding reserves, a currency crisis and a weak economy battered by COVID-19, Reuters reported. There have been wins and losses since taking office in December last year. Debt deals were struck that allowed the government to revamp some $110 billion in foreign currency bonds and push repayments well into the future. Crunch talks with the International Monetary Fund remain positive.

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Holders of Argentina’s $15bn in provincial debt are growing nervous that pressure from the national government is behind “arbitrary” demands for debt restructurings, threatening investors with big losses, the Financial Times reported. After the successful restructuring of $65bn in sovereign debt with foreign creditors in August, Argentina’s leftist government is now locked in talks with the IMF to renegotiate the repayment of $44bn lent since a currency crisis in 2018. Foreign creditors to Argentina’s provinces are next in line.

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Argentina’s Buenos Aires province has extended an already-delayed deadline to Jan. 4 for bondholders to agree a deal to restructure some $7 billion in foreign debt, the local government said in a statement late on Monday, Reuters reported. The extension comes as the latest deadline came and went on Friday without an agreement with its creditors. “The Ministry of Finance will continue to dialogue in good faith with external private creditors,” the district said in the statement announcing the extension on its website.

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Relations between the United States and China promise to be fraught even under President-elect Joe Biden’s administration, Bloomberg News reported in a commentary. There’s one area where the two rivals can and should cooperate immediately, however: to head off a looming debt crisis that threatens to hurl millions into poverty across Africa, Latin America and Asia. When many of the world’s poorest countries last found themselves unable to service their debts 25 years ago, the U.S. led a global effort — the 1996 Highly Indebted Poor Countries Initiative — to forgive much of that debt.

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