Argentina’s former nemesis Paul Singer is standing judgment over the nation’s bond market once more, Bloomberg News reported. Four years after cutting a deal with the hedge fund billionaire to end a lengthy legal dispute over its defaulted debt, the South American country can’t pay its debts again and Singer is back for a brief encore. His investment firm Elliott Management Corp. is one of 14 companies that will decide whether credit-default swaps were triggered by last week’s failure to meet a payment deadline.
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Argentina’s ninth default on its external debt is now official after some of its bonds were cut to default status by two rating companies, Bloomberg News reported. Fitch Ratings reduced the South American nation to restricted default Tuesday, while S&P Global downgraded four of its dollar-denominated bonds to default from CC following a missed $500 million payment last week.
LATAM Airlines Group, the continent’s largest carrier, filed for U.S. bankruptcy protection on Tuesday, becoming the world’s largest carrier so far to seek an emergency reorganization due to the coronavirus pandemic, Reuters reported. The filing highlights the financial weakness of Latin America’s carriers, following a similar bankruptcy earlier this month by the region’s No. 2 airline, Avianca Holdings. But unlike Avianca, which experienced management turmoil and losses, Chile’s LATAM posted profits for the last four consecutive years totaling more than $700 million.
Chile’s Latam Airlines Group SA has hired U.S. investment boutique PJT Partners to explore debt restructuring options that may include bankruptcy protection filings in three countries, Brazilian newspaper O Estado de S. Paulo reported late on Monday, Reuters reported. According to the paper, which cites sources with knowledge of the matter, Latam is considering filing for Chapter 11 in the U.S. and equivalent bankruptcy protection in Chile and Brazil, where are the company’s largest operations.
Argentina missed a bond payment on Friday and inched closer to another crushing default, which would plunge it into a new period of economic isolation and deepen a recession that has been exacerbated by the coronavirus pandemic. The missed deadline means Argentina has technically entered default for the ninth time in its history, the International New York Times reported. But the government signaled that it was making progress toward a deal with creditors to restructure $66 billion in foreign debt and announced that negotiations would continue until June 2.
Creditors of Odebrecht’s ethanol unit Atvos have approved a restructuring plan, the Brazilian firm said in a statement late on Wednesday, Reuters reported. Under the plan, Atvos expects to reduce its net debt to three times its earnings before interest, tax, depreciation and amortization, a gauge of operational profit known as EBITDA, from the current six times, as it will transfer 46% of its debt to a new vehicle. It will start paying small suppliers in 90 days. Remaining creditors will start receiving partial payments in 2022.
Even if Argentina defaults for the ninth time in its history, creditors say the issue could be cured quickly as the two sides work to restructure $65 billion in overseas bonds, Bloomberg News reported. Although an event of default will be hard to avoid for Argentina, there is willingness to resolve the negotiations, said Greylock Capital Management LLC’s Chief Executive Officer Hans Humes at an online event.
Bunge’s Brazil unit has signed a contract to acquire two soy crushing plants from Imcopa, according to a statement sent to Reuters on Wednesday, marking another step to consolidate its position as Brazil’s largest soybean crusher, Reuters reported. Imcopa, which is operating under bankruptcy court protection, confirmed the signing of the contract and said the aim of the sale is to keep the plants running and protect jobs, according to a separate statement. Bunge said regulatory approvals for the transaction are still pending.
Investors holding debt protection for Ecuador are in line to share compensation of about $60 million after the South American nation struck a deal with creditors to suspend coupon payments on its foreign debt, Bloomberg News reported. Firms holding the country’s credit-default swaps will receive about 65% of the amount covered by the instruments, according to the final results of an auction to settle the contracts on Tuesday. They get triggered when a borrower fails to pay its debt. Investors use the instruments to make negative bets on borrowers or as hedges for bond investments.