South America

TMD Friction's German companies filed for insolvency yesterday as the auto supply group became the latest victim of the global downturn, the Financial Times reported. The private Luxembourg-registered group, the industry's second-biggest supplier of brake pads and linings after America's Federal-Mogul, said the rapid slowdown in the industry had "led to a very high level of pressure on our cash flow." Its owners are looking to sell the business, and are in talks with potential private equity investors, according to its chief executive.

Ecuador’s government is considering various ways of repudiating its debt and will ask for loans from friendly governments like Iran should it lose access to credit markets, the country’s finance minister Maria Elsa Viteri said. Ecuador has threatened to default on $3.9 billion in bonds because it says a government-commissioned audit found evidence of criminal violations in connection with its issuance, Bloomberg reported. The government skipped a $30.6 million bond payment on Nov. 15, invoking a 30-day grace period.

Foreign Minister Maria Isabel Salvador said Ecuador won't illegally default on its close to $4 billion in sovereign debt, Bloomberg reported today. While a debt audit called by President Rafael Correa has revealed evidence that crimes were committed when the debt was contracted, any decision to repudiate the debt will go ahead in accordance with the law, she said in a radio interview with Quito-based Ecuador Inmediato yesterday. “Ecuador will never act outside the law,” she said.

A debt auditor said Ecuador would find challenging its foreign debt in U.S. courts difficult because the country signed away its legal rights in bond agreements over a 20-year period, Bloomberg reported. Halting debt payments without the support of a court decision would be a “catastrophe” for the nation, said Alejandro Olmos, a member of a committee appointed by President Rafael Correa to review the debt. Bondholders could seize Ecuador’s assets, including those of state-owned oil company PetroEcuador, he said. Ecuador on Nov.

Ecuador's flirtation with a $10.3 billion foreign debt default may force bondholders into restructuring, potentially saving the government billions of dollars at a time when access to capital is increasingly tight, the Associated Press reported today. Ecuador is going to "present a credible threat of default and force bondholders to renegotiate the terms of existing debts, winning savings and considerable benefits for the state," Patrick Esteruelas, an analyst at the Eurasia Group in New York, said Wednesday.

The official overseeing an audit of Ecuador's foreign debt said his committee found evidence of abuses and irregularities tied to almost all of the country's bonds and will recommend a default on $10.3 billion in national debt, the Associated Press reported yesterday.

Brazil's important ethanol sector took a hit Friday after a major producer revealed that it filed court papers seeking protection from creditors while it restructures $100 million in debt, the Associated Press reported. Companhia Albertina sought the protection similar to Chapter 11 bankruptcy reorganization used in the United States but will continue operating, said Gabriel Andrade, an investment banker with Sao Paulo's Arsenal Investments who is advising the company. It appeared to be the first sign of trouble for an ethanol producer since the credit crisis hit the planet hard.

Rafael Correa, Ecuador's left-wing president, has heightened fears that the Andean nation will default on parts of its $10 billion (£6.8 billion) foreign debt, saying an internal audit due out this week will determine if the debt is "illegitimate," the Financial Times reported today. "If there are sufficient grounds for illegitimacy, we won't pay this debt," he said.