South America

Ecuador is aiming to secure additional financing by the end of August to help plug its fiscal gap after wrapping up a deal to restructure $17.4 billion of debt, according to Finance Minister Richard Martinez, Bloomberg News reported. President Lenin Moreno’s administration is negotiating a new program with the International Monetary Fund as well as some $2 billion in bilateral loans from China. Martinez said the Asian Infrastructure Investment Bank is also considering a $50 million loan to support small and medium enterprises. “August is key,” Martinez said in an interview from Quito.

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It took months of tough talks for Argentina to reach agreement on restructuring $65 billion (49.65 billion pounds) in debt, Reuters reported. Now, economists and policymakers say, the real work begins: reviving Latin America’s No. 3 economy from its currency and fiscal crises. Though both government and creditors celebrated Tuesday’s deal that should help Argentina avert a messy default, it still faces a 10%-plus contraction this year, an over-valued peso, spiking poverty and a deep fiscal hole.

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Itau Unibanco Holding SA’s Chief Executive Candido Bracher said on Tuesday that next year he sees Brazil’s 90-day default ratio reaching higher levels than in previous crisis, Reuters reported. “Brazil’s GDP is poised to drop by unseen levels, so it is natural that there will be higher loan delinquency rates,”, Bracher told journalists in a conference call. Itau’s 90-day delinquency ratio reached a peak of 5.6% in 2009 and 4.8% amid a recession in 2016. Its second-quarter loan default was at 2.7%, but Bracher said he sees it going up next year, as grace periods extended to clients end.

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Argentina has reached an agreement with creditors to restructure around $65 billion in sovereign debt, breaking a deadlock in talks that will help the country climb out of default and banish fears of a damaging and protracted legal standoff, Reuters reported. The economy ministry said in a statement here on Tuesday it had reached an accord with major creditors after agreeing to adjust some payment dates and legal clauses to sweeten what had been touted as its "final" proposal made in early July.

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Argentina and its creditors are nearing a breakthrough $65 billion debt restructuring deal, a lawmaker and two sources told Reuters on Monday, the eve of a deadline for a deal that would help avert a damaging legal standoff, Reuters reported. The South American country has been at an impasse with creditors including BlackRock and Ashmore, over proposals to revamp the debt ahead of the Aug. 4 deadline. Last month, the main creditor groups had rejected the country’s “final” offer and rallied behind a counterproposal.

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Brazil’s Gol Linhas Aereas Inteligentes on Friday said its daily cash burn could quadruple in the next three months compared with the second quarter, adding to heavy 2020 losses already totaling 4.3 billion reais ($823.3 million), Reuters reported. Brazil’s largest domestic carrier, like almost all airlines around the world, is reeling from the impact of the coronavirus crisis on travel. It reported a net loss of 2 billion reais in the quarter. Gol’s own forecasts show it could face a liquidity crunch soon. The airline is scheduled to repay $300 million to Delta Air Lines in September.

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Emerging-market stocks and currencies are within touching distance of erasing their pandemic-fueled losses of 2020, Bloomberg News reported. Too bad the virus is still running riot, economies are shrinking and central banks are getting low on firepower. In fact, the backdrop is so grim that investors may soon start to take the view that prices are starting to defy gravity. After falling more than 30% by March, developing-nation stocks as measured by MSCI Inc.’s benchmark index are just 3% below the level at which they started the year.

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Argentina’s creditors have approached several international organizations to seek endorsement for a proposal to change the rules that govern some of the country’s overseas securities, according to people familiar with the matter, Bloomberg News reported. The International Monetary Fund, the U.S. Treasury, the International Capital Market Association and the Institute of International Finance are among the organizations that have been informally approached by bondholders, said the people, who asked not to be identified discussing a private matter.

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LATAM Airlines will fire “at least” 2,700 workers in Brazil, including pilots, its Brazilian arm said on Saturday, as the bankrupt carrier struggles to cut costs and cope with an industry collapse due to the COVID-19 pandemic, Reuters reported. In a statement, LATAM Brasil said it opened a voluntary redundancy process on Friday which will run through Aug. 4, after which a further minimum 2,700 jobs will be cut. The announcement followed the breakdown in talks with the SNA union over workers’ pay, the statement said. O Globo and O Estado de S.

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Argentina economy minister Martin Guzman emphasized on Thursday that the country’s proposal to creditors to restructure around $65 billion in foreign debt was the maximum effort it could make, and hinted the deadline for a deal could be extended, Reuters reported The South American nation is racing to clinch a deal to avoid a messy and protracted legal standoff with creditors after it slipped into default for the ninth time in May. The deadline for a deal set by the government is currently Aug. 4.

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