South America

G20 Backs Crackdown On Tax Avoidance

Leaders of the world’s largest economies ratcheted up the pressure on tax avoidance by backing “an ambitious and comprehensive” plan to crack down on multinationals that shift profits into low-tax countries, the Irish Times reported. The G20 countries also stepped up the assault on evasion, with plans to exchange tax information automatically between themselves by the end of 2015 and calling “on all other jurisdictions to join us by the earliest possible date”.
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Brazilian tycoon Eike Batista will ask creditors of his debt-strapped oil company OGX to become shareholders and inject new cash, in a last ditch attempt to avoid seeking bankruptcy protection, Folha de S.Paulo newspaper said on Thursday. The plan will be presented to bondholders of OGX Petróleo e Gás Participações SA next Tuesday in New York, Folha said, citing five people involved in the negotiations. However, an OGX spokeswoman told Reuters it was not true that the company had scheduled a meeting with bondholders for next week.
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Robert Shiller, who predicted the collapse of the U.S. housing market, is warning that a bubble is emerging in Brazil at a time when a sluggish economy and persistent inflation are eroding investor confidence, Bloomberg reported. Since January 2008, home prices in Sao Paulo have soared 181 percent and jumped 225 percent in Rio de Janeiro, according to the FIPE Zap index. That’s as much as twice the increase in rent prices, signaling that the housing market has become overheated, according to Shiller, a Yale University professor who helped create the S&P/Case-Shiller Index of U.S.
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Companies in Brazil, struggling with weak economic growth, rising borrowing costs and a currency slump, are likely to boost demand for advice on debt restructuring as early as next year, a partner at investment banking firm Virtus BR Partners said on Tuesday, Reuters reported. The newfound caution of private-sector lenders could make it harder for some companies to refinance existing loans or make new ones, said Eleazar de Carvalho, a senior partner at Virtus. He did not signal out specific sectors, but said refinancing talks between banks and borrowers are starting.
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Banks Face New Set Of Capital Rules

Banks face being hit with a new set of international capital rules aimed at forcing bondholders rather than taxpayers to bail out failing institutions, the Financial Times reported. Global regulators are seeking support from world leaders to draw up proposals to force banks to hold a minimum amount of debt that can be “bailed in” if a bank collapses.
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The flagship oil company controlled by Brazilian businessman Eike Batista plans to present a proposal to restructure its debts in two weeks' time, in which bonds would be swapped for shares and the firm would try to raise fresh capital, according to a person familiar with the transaction, The Wall Street Journal reported. The fortunes of OGX Petróleo e Gás Participações SA, the linchpin in Mr. Batista's sprawling industrial empire, collapsed after its only operating oil field failed to live up to expectations when it began production in mid-2012.
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Argentina's government will reopen a 2005 debt swap for a second time after an adverse ruling in a New York court last week, The Wall Street Journal reported. The move, unveiled by President Cristina Kirchner Monday, comes as the government deals with the fallout from a U.S court decision last week that ordered Argentina to pay a group of so-called holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest. The Kirchner administration has refused to pay the holdouts, saying they don't deserve 100% of what they are owed under U.S. law.
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Brazilian airlines are seeking government aid to help curb losses stemming from a weakening currency, in the first sign that the rapid sell-off of emerging market assets is beginning to hurt the country’s corporate sector, the Financial Times reported. The plea was swiftly followed by further declines in the real, which closed at R$2.4543 against the US dollar, the lowest level since December 2008, after US Federal Reserve minutes showed officials in support of slowing its monthly asset purchases later this year.
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Brazil has called for the IMF-backed rescue programmes for Greece and other southern eurozone countries to be reviewed to make them more economically sustainable. The call from finance minister Guido Mantega came as he sought to explain Brazil’s stance on Greece’s rescue programme after its IMF representative, Paulo Nogueira Batista, abstained from a vote to approve the latest tranche of help for Athens.
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