South America

Brazilian airline Azul SA on Monday said it will seek to buy certain assets held by struggling rival Avianca Brasil for $105 million, on the same day a local court allowed the carrier to hold onto its planes despite mounting missed payments, Reuters reported. Under the proposed terms, Azul would buy airport slots and assume some aircraft leases from Avianca Brasil but inherit none of its debts.

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As if muddling through a humanitarian crisis and a sharpening political stand-off between authoritarian Nicolás Maduro and opposition leader Juan Guaidó weren’t bad enough, Venezuela will soon have to wade through what is said to be one of the messiest debt restructurings in history, the Financial Times reported. What will make Venezuela’s forthcoming debt workout so difficult to resolve is not just the amount of IOUs sitting on its balance sheet, but the diversity of its creditor base. Like most metrics in Venezuela, these exact figures are difficult to come by.

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Brazilian state bank Caixa Economica Federal is preparing an extraordinary provision of 7 billion reais ($1.87 billion) due to expected defaults on home loans and a loss of value in the real estate held by the bank, two sources told Reuters. The move is being done at the behest of newly appoint Chief Executive Pedro Guimaraes, said the sources, who requested anonymity to discuss private matters, Reuters reported. If the proposal goes into effect, it will reduce profit to 10 billion reais in 2018, against the bank’s expectations for 16 billion reais, the sources said.

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Ecuador’s benchmark bonds soared to a six-month high after President Lenin Moreno’s government secured a $4.2 billion loan package from the International Monetary Fund, Bloomberg News reported. The aid is intended to support the OPEC nation over the next three years as it tries to curb spending and revive sluggish growth. Including the IMF package, Ecuador is set to receive more than $10 billion in loans from multilateral lenders, Moreno said Wednesday in a televised address to the nation. “Thanks to the firm decisions I have made, we are not what today is Venezuela,” Moreno said.

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Brazilian conglomerate Odebrecht SA next week will ask its bondholders to accept losses of more than 70 percent from their bonds’ face value as part of a restructuring, two sources with knowledge of the matter said on Wednesday. Around $3 billion in outstanding Odebrecht Finance Ltd bonds will be affected, the sources added, asking for anonymity to disclose private plans, Reuters reported. The exact size of the haircut is still undefined, but the person said it could be between 70 percent and 80 percent of the bonds’ value.

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South Africa’s AngloGold Ashanti said on Tuesday it was putting its interests in an Argentine mine up for sale as it looks to focus on operations with a longer shelf life and ability to deliver higher returns, Reuters reported. AngloGold Chief Executive Kelvin Dushnisky, Barrick Gold’s former president, was appointed to head the firm last year and has rolled out plans to streamline its portfolio, set a 15 percent hurdle on returns on investment and cut debt leverage targets to a ratio of 1.0 times net debt to adjusted Earnings before interest, tax, depreciation and amortization.

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Distressed-debt investors are deeply divided when it comes to how much bondholders can recover after a Venezuelan restructuring, Bloomberg News reported. Doomsayers argue that a nation suffering Latin America’s worst humanitarian catastrophe has greater concerns than paying investors. Harvard economist Ricardo Hausmann, an informal adviser to U.S.-backed National Assembly leader Juan Guaido, has said creditors must take a big haircut.

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Samarco Mineracao SA, the Brazilian mining venture that hasn’t operated since a deadly dam collapse in 2015, will seek to reboot talks with creditors after one of its parent companies suffered an even worse disaster at its own site, according to people involved in the discussions. Last month’s deadly accident at a Vale SA tailings dam in Minas Gerais state has upended the outlook for Samarco, which is jointly owned by Vale and BHP Group Ltd, Bloomberg News reported.

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Funds controlled by activist investor Elliott Management have agreed to extend $75 million in financing to bankrupt airline Avianca Brasil, according to documents seen by Reuters on Wednesday. A term sheet signed by Manchester Securities Corp, Elliott Associates and Elliott International was submitted to the court overseeing Avianca Brasil’s bankruptcy proceedings on Monday, the document shows.

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