South America

The Brazilian government on Wednesday announced measures aimed at increasing bank lending, including granting banks permission to issue home-equity loans, The Wall Street Journal reported. The measures also include reducing documentation for mortgages and streamlining the process to seize loan collateral. "Credit supply is running very low. The new measures will create conditions for the banks to offer more loans," Finance Minister Guido Mantega told reporters after the announcement.

Argentina's unemployment rate rose to 7.5% in the second quarter as the country's recession appeared to worsen and more companies laid off workers, The Wall Street Journal reported. The jobless rate, published by the government on Tuesday, is up from 7.1% in the first quarter and 7.2% a year earlier. Economists expect the unemployment rate to rise further this year as the recession worsens and more people find it harder to find jobs.

Argentina will send a bill to Congress to authorize the payment of foreign debt in local accounts in a bid to skirt a U.S. court ruling that is blocking payments and caused the nation to default on July 30, Bloomberg News reported. Argentina will seek to remove trustee Bank of New York Mellon Corp. and deposit funds for foreign bondholders at an account at the central bank, President Cristina Fernandez de Kirchner said in a nationwide address.

Argentina came out swinging today against the US judge overseeing its debt default case, in defiance of a threatened contempt order, and disappointed market hopes it might soon restart talks with the hedge funds suing the country, the Irish Times reported. A group of holdout investors have sued the South American country for full repayment on bonds that went into default in 2002. The funds rejected debt restructurings in 2005 and 2010, holding out for better terms.

Brazil's Oleo e Gas Participacoes SA, the bankrupt oil company controlled by Eike Batista, said yesterday that Brazilian buyout firm Cambuhy Investimentos bought shares worth 199.9 million reais ($87 million) that it held in Parnaíba Gás Natural, formerly known as OGX Maranhão, Reuters reported yesterday. The 245,728,660 shares were auctioned on Wednesday, the company said in a securities filing. Parnaíba was separated from OGX in October in an operation that generated 344 million reais, which was crucial for the survival of Batista's oil company.

Argentina has filed suit against the U.S. at the International Court of Justice in a high-stakes debt dispute between the South American nation and some of its creditors, the Wall Street Journal reported today. Argentina's lawsuit contends that decisions by U.S. courts in the dispute have violated its sovereignty, The Hague-based court said today. Argentina defaulted on some of its restructured debt July 30 after marathon talks with hedge funds suing to collect on bonds the country stopped paying in 2001 ended without a deal.

The U.S. judge overseeing a court battle that led Argentina to default on a $539 million interest payment last week ordered the nation and a group of U.S. hedge funds to keep talking in a bid to resolve the crisis, Bloomberg News reported on Friday. U.S. District Judge Thomas Griesa also said on Friday that he won’t replace a court-appointed mediator, after a lawyer for Argentina said it “no longer has confidence” in the negotiation process led by McCarter & English LLP partner Daniel Pollack.

Argentina’s debt saga has been dragging on for more than 12 years and, with the country slipping back into default on Wednesday, it is far from over. Hopes remain that a deal with the private sector can still be reached, the Financial Times reported. A last-minute proposal by a group of Argentine banks collapsed behind the scenes shortly after economy minister Axel Kicillof announced that the “vulture funds” had rejected the government’s offer. But other proposals are in the works, according to local media.

Talks aimed at a last-minute settlement between Argentina and holdout creditors collapsed late Wednesday, and a court-appointed mediator said the country would "imminently" be in default, The Wall Street Journal reported. At a news conference after talks with the mediator ended, Argentine Economy Minister Axel Kicillof, who had led the country's delegation to New York, said "we won´t sign an agreement that would compromise Argentina´s future." A spokeswoman later said negotiations would continue, without giving a timetable. The likely default would be Argentina's second in 13 years.

Barring a last-minute deal, Argentina will default on billions of dollars of bonds on Wednesday, the International New York Times reported. It would be Argentina’s second default in 13 years. But unlike the last time, when scores of unhappy Argentines took to the street as unemployment rose to 25 percent and inflation soared, this default would look decidedly different. Argentina’s equity, bond and currency markets, which have been volatile in recent days, would certainly feel a jolt.