South America

China agreed to several small oil deals with Venezuela this week but gave no public confirmation that it would extend more loans to the cash-strapped country during a rare visit by President Nicolás Maduro to Beijing. Venezuela faces a stiff payments schedule over the next two months of about $2bn to bondholders, some of whom have debt secured against US-based refiner Citgo, and in compensation to western oil companies for past nationalisations in Venezuela.
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Fifty years of currency crises from Chile to Indonesia signal a bleak outlook for Argentina and President Mauricio Macri -- a deep recession followed by political upheaval. Countries that have seen their currency decline by more than 40 percent in a year have typically suffered economic contractions of more than 6 percent the year after. Argentina’s peso is down 53 percent in the past 12 months, Bloomberg News reported.
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Just days after panic swept through Argentine financial markets, some investors see pockets of opportunity but they also face the difficulty of trading in an environment distinguished by the evaporation of price liquidity, the Financial Times reported. Against this backdrop even small trades can move market prices sharply, making any substantial changes to a portfolio difficult to implement.
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Brazilian infrastructure operator Invepar should focus on refinancing its substantial debt load instead of pursuing an immediate sale, the chief executive of pension fund Previ, one of Invepar’s key investors, said on Monday. Speaking on the sidelines of a pension fund event in Florianopolis, Previ’s José Mauricio Coelho said Invepar may issue new debt or extend maturities on its current debt, instead of looking for an investor to take control of the company and inject cash, Reuters reported. Invepar has lost 1.2 billion reais ($291 million) over the last two years.
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Argentines are struggling in crisis in what was once one of the world's most prosperous nations. Consumer prices are soaring, unemployment is high and the Argentine peso has plunged, bringing back haunting memories of the country's economic meltdown in 2001 that pushed millions into poverty, the International New York Times reported on an Associated Press story. A growing number of people arrive at the "Happy Kids" soup kitchen in the Villa 1-11-14 shantytown, where servers try to stretch out steaming pots of stew because many more than expected are lining up for food.
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Making Ends Meet in Argentina

The ingredients of Argentina's ongoing economic and currency crises are painfully familiar: an overvalued peso, gaping twin deficits and a hefty pile of dollar-denominated debt. Cue the IMF, and it's difficult to avoid flashing back to the country's $100bn-plus default in the early 2000s—the biggest in history at the time. But while Argentina's roughly $75bn financing needs for this year and next certainly appear daunting, there's reason to be (cautiously) optimistic that the country will be able to make ends meet this time around, the Financial Times reported in a commentary.
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The Canuelas Golf Club is spread out on 178 acres of pristine pampas grassland on the western outskirts of Buenos Aires. Inaugurated in 2014, the club plays host to the Latin American PGA Tour and is the pride and joy of its owner, the corporate titan Aldo Navilli. But the club has now drawn the attention of another set of investors as well: Creditors including ING, Rabobank and the World Bank’s International Finance arm.
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Investor anxiety about a missed debt payment by one of the world’s largest developing nations is jacking up the cost of credit-default swaps from the "BATS" -- Brazil, Argentina, Turkey and South Africa -- to multi-year highs, Bloomberg News reported. Argentina’s implied default probability over the next five years climbed this month to 41 percent, the highest since Mauricio Macri’s government ended the nation’s decade-long legal battle with most holdout creditors. Turkey’s implied default odds during that span rose to 31 percent, the highest since the 2008 global financial crisis.
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When they meet Tuesday to discuss the currency crisis, senior officials from Argentina and the International Monetary Fund will seek a response that strikes a balance between domestic policy changes and external financing aid, a task that has been complicated by political and trust issues, a Bloomberg View reported. While Argentina is almost certain to get some concessions from the IMF, a decisive solution will be far more difficult and will require a lot of courage and skillful risk-taking on both sides.
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A currency crisis is driving Argentina deeper into a recession. The peso is down more than 50 percent so far this year, competing in a race-to-the-bottom with the Turkish lira as the worst-performing currency in emerging markets, Bloomberg News reported. An emergency measure by the central bank, hiking interest rates to 60 percent from 45 percent, didn’t stop the peso’s plunge. Nor has selling reserves. Analysts say the lack of a clear, consistent strategy in South America’s second-largest nation is causing investors and the public to lose faith in the government of President Mauricio Macri.
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