South America

Argentine officials met last week with representatives from the International Monetary Fund in Washington as the government of South America’s second-largest economy seeks to rework its troubled loan program, Bloomberg News reported. Economic Policy Secretary Fernando Morra and Central Bank Economic Research Deputy General Manager German Feldman traveled to the U.S. to hold the in-person meetings with IMF staffers including Argentina mission chief Luis Cubeddu.
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Creditors said that Alpha defaulted earlier this year when the privately held nonbank lender disclosed accounting errors in its Mexican segment, sending its bond prices tumbling, WSJ Pro Bankruptcy reported. Alpha has $768.4 million in debt, mostly unsecured bonds, and has lined up $45 million in emergency financing to get through chapter 11 proceedings in the U.S. Bankruptcy Court in Wilmington, Del. The Mexican segment didn’t file for bankruptcy.
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Peru’s Finance Minister Pedro Francke was given assurances from the new government that he’ll be able to implement his economic program, he said in the first interview since securing his new role, Bloomberg News reported. Francke, a former World Bank economist, was sworn in late Friday, a day when markets crashed amid investor concern that he wouldn’t take the post due to differences with other members of the cabinet appointed by President Pedro Castillo. These included Guido Bellido, a lawmaker who considers the communist government of Cuba to be a democracy, as prime minister.
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Across the world, government bondholders have seen losses pile up this year as a pickup in inflation and economic growth puts central banks under pressure to raise interest rates, Bloomberg News reported. That makes even more remarkable the windfalls seen in Ecuador, a junk-rated South American nation that was mired in recession even before the pandemic and was forced to restructure $17.4 billion of debt last year -- a step rating companies considered a default.

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Peruvian assets tumbled on concern new President Pedro Castillo’s top economic adviser may not take a cabinet role, further fueling investor anxiety over his government’s plans to remake the economy, Bloomberg News reported. An ETF tracking Peru stocks fell more than 7%, the currency had its worst day since 1994 and overseas bonds due in 2031 slipped to the lowest in seven weeks.
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Of all the numbers that lay bare the pandemic plight of blue-collar workers, few are as jarring as the pay cut suffered by the millions of Argentines who toil in off-the-book jobs, Bloomberg News reported. The decline for people like waiters, construction workers and candy-vendors was 36% on average last year, considering inflation. That staggering number is almost four times the average pay cut that Argentines in the formal economy had to absorb.

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Investors sent Peruvian bonds sliding in the aftermath of President Pedro Castillo’s inaugural call for a new constitution and choice of prime minister, Bloomberg News reported. Peru’s dollar bonds due in a century are the second-worst performers in the world on Thursday, beating only serial-defaulter Belize, according to data compiled by Bloomberg. Meanwhile, the yield on the benchmark bond due in 2031 rose to the highest since the close on June 16, a day after the final vote count showed Marxist party-backed Castillo winning the election.
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This month, Argentina's central bank is issuing money to the General Treasury at the fastest rate so far this year, which could fuel even faster inflation, while helping finance public spending ahead of the legislative elections of November, Bloomberg News reported. The monetary authority led by Miguel Pesce sent between July 1 and 22, 180,000 million pesos (US $ 1,860 million) to the Government, double the amount for the entire month of June and the highest figure since last December.
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The superintendence of Brazil's competition regulator Cade said on Friday that it viewed an asset sale by Brazilian telecom Oi SA as "complex," suggesting that TIM, Telefônica Brasil and América Móvil's Claro may struggle to wrap up a quick sale, Reuters reported. The three companies won an auction to buy Oi's mobile network operations for 16.5 billion reais ($3.17 billion) in December, pending regulatory approval, after Oi filed for bankruptcy protection in 2016.
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Colombian airline Avianca obtained financial commitments for US$1.6 billion to finance its exit from chapter 11 bankruptcy law as part of its reorganization, The Rio Times reported. "As a result of the continued support of its creditors, Avianca Holdings filed a motion with the bankruptcy court seeking approval of the terms of the commitment letters for its US$1.6 billion chapter 11 exit financing," the airline said in a statement. Avianca is the largest airline in Colombia and second largest in Latin America, after LATAM of Chile.

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