South America

Even in an industry devastated by the coronavirus crisis, Latin American airlines stand out. Five of the biggest carriers in the region -- Latam Airlines Group SA, Gol Linhas Aereas Inteligentes SA, Azul SA, Avianca and Volaris -- have seen about $12 billion in their market value wiped out since the end of January through Wednesday’s close, Bloomberg News reported. On average, their stock tumbled 78% in local currency terms, more than all 23 members in the Bloomberg World Airlines Index. The global gauge is down 46% in the period.

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Latin American airlines need prompt government aid or many of them could go out of business as the global coronavirus outbreak forces widespread flight cancellations, the chief of regional airline association ALTA said…However, Chile’s economy minister dismissed the idea of providing aid to the country’s flagship carrier, the largest in the continent, Reuters reported.

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Argentina's government has struck a deal with domestic bondholders to swap around 200 billion pesos ($3.2 billion) in local currency debt in a major planned auction on Thursday, the country's Economy Minister Martin Guzman told Reuters. The scheduled swap, which is offering new instruments that expire between 2021 and 2024 for others maturing up to this year, is part of Argentina's drive to gain more time to make payments amid a widespread debt crisis, the International New York Times reported on a Reuters story.

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Argentina will need “substantial relief” as it restructures nearly $70 billion in debt with international bondholders, the country’s economy minister Martin Guzman told Reuters, signaling a tough tonic ahead for the country’s creditors, Reuters reported. In his first interview with international media since taking up his role in December, the 37-year-old U.S. trained economist, said a March 31 deadline to strike a deal with bondholders may also be affected by a global coronavirus outbreak that was hitting plans for road shows for the government’s debt proposal.

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A plunge in world oil prices and resulting market turmoil has thrust Latin American governments into the unenviable position of trying to shore up their economies without blowing a hole in their budgets or scaring off international investors, Reuters reported. From Mexico to Brazil, many countries in the region are major exporters of crude and other commodities, and have been hit by a triple whammy of oil’s price crash, cratering import demand from major buyer China, and a precipitous fall in their exchange rates.

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Argentina’s new Peronist government has been caught off guard by global financial market turmoil at a crucial point in its talks with creditors to restructure more than $100bn of foreign debt, raising the risk that the negotiations could be delayed and result in a messy default, the Financial Times reported. Martin Guzmán, economy minister, has met investors for preliminary talks and was due to unveil the government’s initial offer this week.

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Telefonica SA and Telecom Italia SpA’s Brazilian units are working together to buy the mobile operations of Oi SA and end years of failed attempts to consolidate the country’s wireless industry, Bloomberg News reported. Telefonica Brasil SA and Tim Participacoes SA said they’ll will hold discussions on a potential joint acquisition of all or part of Oi’s mobile assets, which Bradesco BBI estimates may be worth at least 12 billion reais ($2.6 billion).

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Argentina said it intends to restructure as much as $68.8 billion in bonds issued under foreign law, a formal step in negotiations with creditors, Bloomberg News reported. It’s the first time President Alberto Fernandez’s government has explicitly stated the nominal value of debt held by foreign bondholders it plans to restructure. The two sides are in fast-paced negotiations that Economy Minister Martin Guzman intends to conclude by the end of March. The midnight government decree came hours after Argentine bonds plunged to record lows amid falling oil prices and coronavirus fears.

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Oil companies just can’t catch a break. Energy bonds plummeted Monday to record lows, some of them with extraordinary drops of 10, 20 or even 30 cents on the dollar, Bloomberg News reported. The average spread over Treasuries for companies in the Bloomberg Barclays High Yield Energy index has surged above 10% for the first time since 2016, back when hundreds of energy-related companies were going bust or restructuring. That last round of rejiggering was supposed to stabilize the industry’s future by cutting debt and extending maturities for almost a decade.

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Ecuador’s dollar bonds slumped the most in emerging markets as investors price in a higher probability of default following the crash in crude prices, Bloomberg News reported. The nation’s dollar bonds due 2028 fell 10.6 cents to 47.6 cents on the dollar on Monday, sending the yield surging 4.3 percentage points to 22.3%. The extra yield investors demand to hold Ecuadorian debt over U.S. Treasuries blew out 753 basis points to 27.33 percentage points. That compares to 28.16 percentage points for Argentina which is preparing to restructure its debt.

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