South America

Azul’s shares jumped 16% in Sao Paulo trading after the Brazilian air carrier reached an agreement with its lessors and parts suppliers that helps cut its debt load, Bloomberg News reported. The deal allows the airline to slash 3 billion reais ($547 million) of debt in exchange for 100 million new preferred shares, according to a regulatory filing. “This agreement with lessors should ease the negotiations with other creditors,” Bradesco BBI analyst Victor Mizusaki writes in a note.

Brazil’s annual inflation sped up roughly in line with estimates in September as a historic drought pressured electricity and food prices in Latin America’s largest economy, Bloomberg News reported. Official data released Wednesday showed prices rose 4.42% from a year earlier, just below the 4.44% median estimate of economists surveyed Bloomberg. On the month, they increased 0.44%. Policymakers are raising interest rates as price pressures build and investors grow uneasy about the stewardship of Brazil’s economy.

Root Capital, a Rio de Janeiro-based firm specializing in credit, is launching a distressed-debt fund as filings for bankruptcy protection reach record highs in Brazil, Bloomberg News reported. “We continue to see stress in Brazil’s credit markets, the companies continue to go broke, the agribusiness sector is horrible, and the interest rates that people thought would start to fall now are going up again,” said Rafael Fritsch, partner and chief investment officer at Root Capital.

Latam Airlines Group SA is tapping global debt markets for the first time since the carrier emerged from its chapter 11 bankruptcy, Bloomberg News reported. The Santiago-based airline is selling $1.2 billion in dollar notes maturing in 2030. Initial price talks are taking place at a yield in the low-to-mid 8% range. Latam, the largest carrier in South America, exited the chapter 11 process in late 2022 with 35% less debt, placing a renewed focus on customer service. It recently returned to the New York Stock Exchange, with an offering of American depositary shares.

Executives in Latin America’s largest economy are redrawing plans, reprofiling debt and holding back investment as interest rates climb and the currency remains under pressure, Bloomberg News reported. While companies the world over have been contending with higher borrowing costs, Brazilian firms have had an especially tough burden, hit with some of the steepest rates in the world after surviving the pandemic with little government aid. Now rates are going up again after a respite of just over a year.

Colombia’s central bank cut borrowing costs to a two-year low while ignoring President Gustavo Petro’s calls for an even bigger reduction. The board also elected Governor Leonardo Villar for a second four-year term, Bloomberg News reported. The board split once more as it lowered its benchmark rate by half a percentage point to 10.25%, Villar told reporters on Monday. The move was correctly forecast by 20 of 27 economists in a Bloomberg survey, while the others expected a deeper cut, to 10%.

Chile’s economic activity unexpectedly contracted in August on a decline in services, corroborating the central bank’s message that more interest rate cuts are on the way, Bloomberg News reported. The Imacec index, a proxy for gross domestic product, fell 0.2% on the month, matching the worst estimate in a Bloomberg survey of analysts that had a median forecast of 0.3% growth. From the year earlier, activity gained 2.3%, the central bank reported on Tuesday.

Elliott Investment Management and other U.S. investors have been named as the winning bidder in a court-ordered auction for control of Venezuela’s oil refiner Citgo Petroleum designed to pay down the bankrupt country’s debts, WSJ Pro Bankruptcy reported. A special master appointed to sell Venezuela’s shares in Citgo’s parent company is expected to designate a bid backed by Elliott as the best offer following a monthslong auction process overseen by a federal judge, they said.

Brazil’s annual inflation slowed much more than expected in early September despite a hike to utility bills, giving some respite to the central bank as it raises borrowing costs to tame prices, Bloomberg News reported. Official data released Wednesday showed prices rose 4.12% from a year earlier, below all forecasts in a Bloomberg survey of economists that had a 4.29% median estimate. On the month, they increased 0.13%.

Brazil’s central bank said all board members supported a gradual start to their cycle of interest rate hikes, falling short of explicitly backing faster increases seen by financial markets going forward, Bloomberg News reported. “All members agreed to start the monetary policy tightening cycle gradually,” central bankers wrote in minutes to their Sept. 17-18 rate meeting, when they raised the benchmark Selic for the first time since 2022, to 10.75%.