South America

Brazil’s largest private lender, Itaú Unibanco Holding SA, may pursue loans with a higher risk of defaults in the near future as a way to accelerate loan-book growth, Chief Executive Candido Bracher said on Tuesday. Bracher told analysts on a conference call that a proposal to increase loan-risk appetite will be submitted to the bank’s board, without specifying when it could be implemented. Itaú’s move toward riskier loans would address the concerns of some analysts, who believe that remaining too cautious has hindered lending, Reuters reported.

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Venezuela just forked over almost $1 billion to stay current on a bond backed by shares of its U.S. refiner Citgo, Bloomberg News reported. The question is why. Yes, the payment ensures that Venezuela’s state-run oil company PDVSA gets to hold onto Citgo Holding Inc. for now, but many analysts think it’s just a matter of time before it has to forfeit the company. "It is hard to visualize a scenario in which Venezuela does not sooner or later lose Citgo to one of its defaulted creditors," Francisco Rodriguez, chief economist at brokerage Torino Capital, wrote in a note on Monday.

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An arbitration chamber run by Brazil’s Sao Paulo Stock Exchange has temporarily suspended a capital hike planned by Oi SA in order to adjudicate a dispute between the major telecommunications company and a shareholder, Reuters reported. In a statement on Monday, Oi shareholder Pharol SGPS SA said it had been given until Nov. 5 to present additional arguments to the body regarding the legality of the planned capital raise.

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The International Monetary Fund’s executive board approved a $56.3 billion credit line for Argentina, clearing the way for the embattled South American economy to receive a larger amount of funding at a faster pace than originally negotiated, Bloomberg News reported. The board’s sign-off Friday ratified a revised agreement announced in September. Under the new deal, Argentina will receive about $35.8 billion throughout the remainder of this year and all of 2019, representing nearly a $19 billion increase from the original arrangement negotiated in June.

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A Portuguese court approved on Friday a debt restructuring plan that was passed by creditors in major Brazilian telecom firm Oi SA, marking a step forward in the company’s tortured bankruptcy recovery process, Reuters reported. With the court’s approval, seen by Reuters, bankruptcy courts in all relevant jurisdictions - Brazil, the United States, the Netherlands, and now Portugal - have signed off on the recovery plan, which was approved by creditors in December.

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Venezuela’s state-run oil company is preparing to make a $949 million bond payment that’s due Oct. 29, according to a person with direct knowledge of the matter. Petroleos de Venezuela SA’s plan to make the coupon and partial principal repayment on the 2020 notes would mark a rare exception for Nicolas Maduro’s government, which has racked up nearly $7 billion in defaulted debt to investors, Bloomberg News reported. This bond is backed by a majority stake in Citgo Holding Inc., meaning a non-payment would allow bondholders to lay claim to the crown jewel of Venezuela’s U.S. assets.

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Odebrecht Engenharia e Construcao SA bondholders are growing more pessimistic about the outlook for the construction conglomerate at the center of Brazil’s epic graft scandal, Bloomberg News reported. The firm’s $1.4 billion of dollar-denominated bonds due in 2025 and 2042 have each lost more than 10 cents over the past month, leaving them at a five-month low near 25 cents on the dollar. Investors are growing concerned the builder is running out of money to pay them back amid a dearth of new projects and a swiftly deteriorating cash supply.

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The global financial crisis left lasting scars on the world economy, including slower growth, higher government debt and even lower fertility rates, the International Monetary Fund said. A decade after Lehman Brothers filed for bankruptcy in 2008, output in more than 60 percent of the world’s economies remains below where it would have been if the crisis hadn’t occurred, the fund said in a report Wednesday. The drop was steepest in the 24 countries that experienced financial crises, the Fund said in an analytical chapter accompanying its latest World Economic Outlook, Bloomberg News reported.
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The sell-off in the Argentine peso intensified on Friday, with the currency once again approaching record lows following another big drop at the market open, the Financial Times reported. The peso tumbled 4.7 per cent to hit 41.15 per dollar, knocking out its previous closing low of 39.79 and putting it just a hair away from the all time intraday low of 41.36 reached on August 30. The sharp drop follows Thursday’s 2.8 per cent decline and comes despite the IMF agreeing on Wednesday to increase its bailout package to the Latin American country by an extra $7.1bn.
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