South America

As lending has expanded in Brazil, so too have new opportunities for debt collection, which for the first time is starting to become big business in Brazil, the Wall Street Journal reported today. Brazil's banks have been on a lending boom in recent years, as relatively steady economic growth has led to record low unemployment and rising salaries. The volume of credit in Brazil has almost doubled, and now accounts for nearly 50 percent of gross domestic product. Total loans reached 2 trillion Brazilian reais ($1.1 trillion) in November, according to the central bank.

A bankruptcy judge approved the sale of Peregrine I LLC's offshore oil-drilling vessel to La Patagonia Offshore Inc. for $5 million, Dow Jones DBR Small Cap reported today. U.S. Bankruptcy Judge Kevin Carey signed off on the sale to La Patagonia on Monday following an auction last month, and the buyer has also agreed to pay about $2.7 million to cure defaults. Read more. (Subscription required.)

Analysts say that Argentinian President Cristina Kirchner's mixed signals about how she plans to address longstanding problems in Argentina's economy are adding to uncertainty that is causing capital flight, the Wall Street Journal reported today. In the gap between Kirchner's re-election last month and her December inauguration, Argentines are not clear which policy makers are in charge and what the strategy is, the analysts say.

OPEC member Venezuela sees no risk of debt default due to the stability of oil prices, an economic official said on Monday, amid some market fears the country faces a looming problem with maturing debt, Reuters reported. Despite growing international risk aversion, Venezuela's state oil company PDVSA and the government have issued $15.2 billion of dollar-denominated bonds so far in 2011 -- by far the largest amount in Latin America. Analysts say the maturing of various papers between 2016-17 could be a problem.

Holders of Empresas La Polar SA series A and B bonds agreed to back a debt restructuring plan that aims to avert the department store operator’s second bankruptcy in 12 years, said Nelson Contador, a legal adviser to the company, Bloomberg Businessweek reported. All of La Polar’s creditors will vote on the plan on Nov. 7, Contador told reporters during a meeting of bondholders Friday. Debt will be divided into two parts, La Polar chairman Cesar Barros told reporters at the same meeting.

Itau Unibanco Holding, Brazil's largest private-sector bank, reported its best quarterly earnings for this year as trading-related gains jumped and interest income grew faster than expenses. Gains stemming from the purchase and sale of securities and wider loan spreads offset rising defaults at Itau Unibanco. The bank earned 3.81 billion reais ($2.16 billion) in the third quarter, above the average estimate of 3.62 billion reais from nine analysts polled by Reuters last week.

Brazil's central bank said on Tuesday it will liquidate the assets of Banco Morada, which it said was insolvent and had violated legal norms, Reuters reported. The central bank, which in April said it would scrutinize the books of the Rio de Janeiro-based bank due to irregularities, said the controlling shareholders had not presented a viable recovery plan. Banco Morada has only one branch, and its total deposits as of December 2010 represented only 0.01 percent of Brazilian financial system assets and 0.03 percent of deposits, the central bank said in a statement.

Brazilian consumer bad debt rose 3 percent in August compared with July, Serasa Experian, Latin America's largest credit bureau, said on Monday, Reuters reported. Compared with a year earlier, August bad debt was 29.2 percent higher, Serasa Experian said in a statement. In the January-August period, bad debt was 23.4 percent higher than the same period a year earlier, Serasa Experian said. Serasa Experian is part of the London-based Experian group, the largest credit bureau outside the United States.

Argentina's President Cristina Fernandez has signed into law modifications to the country's bankruptcy code that will give workers greater power to take over bankrupt firms at the expense of creditors such as banks, Dow Jones Daily Bankruptcy Review reported. Among the more controversial aspects of the law published Thursday in the Official Bulletin is a provision that allows the workers of a bankrupt firm who set up a cooperative to ask a judge to suspend for up to two years the ability of creditors to execute guarantees backed by the company's property or assets.

Brazilian policy-makers have fueled their country's economic boom through a state-owned bank that keeps business flush with credit, The Wall Street Journal reported. Now the engine that has helped the nation become a global player in beef, oil and mining is colliding with another policy imperative: battling inflation. The Brazilian National Development Bank, in its latest spur to the economy, last week announced it would lend $1.6 billion at below-market interest rates to help a large company to build a pulp and paper mill.