South America

LATAM Airlines, South America’s largest carrier, on Tuesday reported a net loss of $890 million for the second quarter, hit by the coronavirus pandemic that drove the company into a Chapter 11 bankruptcy filing in May, Reuters reported. The carrier posted a 75% drop in revenue between April and June due to widespread travel restrictions around Latin America. “COVID-19 has had a very significant impact, which is reflected in the company’s numbers,” LATAM CFO Ramiro Alfonsin told journalists.

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Argentine bonds extended a recent dip on Tuesday after the government formalized its $65 billion debt restructuring offer, underscoring investor concern about the South American country’s shaky economy despite creditors’ rallying behind a deal, Reuters reported. Argentina’s over-the-counter bonds closed down an average of 0.3% and traded at around 45-50 cents on the dollar, well below the 54.8 cents net present value (NPV) of the government’s proposal. The country’s risk index also edged up.

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Brazilian telecom firm Oi SA proposed amendments to its restructuring plan on Friday, urging creditors to extend new loans and to get higher bids for assets put on the block. Creditors will vote on the proposed changes on Sept. 8, as Oi plans to exit bankruptcy protection by May 2022, roughly six years after starting the process, Reuters reported. “After lots of talks, we concluded that the plan needed some more flexibility than initially foreseen,” Chief Executive Rodrigo de Abreu said in an interview.

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Fitch Ratings said it downgraded the province of Entre Ríos in central Argentina to C from CCC after the provincial government missed a payment on its 8.75% 2025 bonds, LatinFinance reported. Entre Ríos was scheduled to pay $21.9 million in interest on August 8, but it said on August 6 that it planned to renegotiate the 2025 bonds due to negative macroeconomic impact of the COVID-19 pandemic, Fitch said in a report on Wednesday. The province entered a 30-day grace period for the missed payment as it started the debt restructuring process, Fitch added.

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Brazilian airline Azul SA said on Tuesday it had reached an agreement with its aircraft lessors that would help it save some 3.2 billion reais ($594.61 million) in working capital through 2021 and be repaid beginning in 2023, Reuters reported. The airline has been in negotiations with lessors as the coronavirus crisis derailed Latin America’s air travel industry in March. Azul hired a restructuring firm when the crisis set in and said it was renegotiating its debts out of court to avoid a potential Chapter 11 bankruptcy filing.

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After reaching a $65 billion restructuring agreement in principle with its creditors earlier this month, Argentina must now turn to relief from the International Monetary Fund to free up cash in the near term, the IIF said on Tuesday, Reuters reported. “We think external financing will be comfortable if the IMF rolls over its exposure,” the Institute of International Finance said in a note. The agreement with creditors gives Argentina much-needed breathing space.

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The national government wants Buenos Aires Province to be the first to resolve debt restructuring talks after its own sovereign bond agreement, according to sources with direct knowledge of the matter, the Buenos Aires Times reported. The government's strategy is to prevent debt restructuring talks from other provinces from complicating negotiations related to Buenos Aires Province. thus preventing creditors from demanding better conditions, said the individuals, who asked not to be identified because the negotiations are private.

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Brazil's top four listed lenders are giving months-long extensions for consumers and companies to repay 235 billion reais ($43.98 billion) in outstanding loans, a move to give financially squeezed borrowers breathing room, the International New York Times reported on a Reuters story. The loans subject to forbearance programs, which range from 13% of Banco Santander Brasil SA's portfolio to 10% of Itau Unibanco Holding SA's, are an indicator of potential defaults.

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Argentina's economy is likely to contract 12.5% ​​in 2020, a central bank survey of economists showed on Friday, a slightly more negative outlook than a month earlier as the impact of the coronavirus pandemic hammers the South American nation, the International New York Times reported on a Reuters story. The economic outlook in the monthly report polling 44 economists was down from a 12% estimated drop previously.

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A Brazilian high court ruled on Thursday that the 11 billion reais ($2 billion) debt owed by bankrupt telecom Grupo Oi SA to Brazil’s telecommunications regulator Anatel will not get preferential treatment in restructuring negotiations, Reuters reported. The Superior Court of Justice, known as STJ, Brazil’s second-highest court, ruled that the debt was administrative and could not be given priority treatment. Brazil’s biggest fixed-line telecommunications operator filed for bankruptcy protection in June 2016. Oi had about 65 billion reais of debt at the time.

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