South America

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.