South America

Argentina’s government is seeking to extend maturities on tens of billions of dollars of debt and delay repayments to the International Monetary Fund after a collapse in the peso and its bonds, Bloomberg News reported. The government will postpone $7 billion of payments on short-term local notes held by institutional investors this year and will seek the “voluntary reprofiling‘’ of $50 billion of longer-term debt, Economy Minister Hernan Lacunza said. It will also start talks over the repayment of $44 billion it has received from the IMF.

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Argentina investors scorched by one of the worst sell-offs in the history of emerging markets are banking on the International Monetary Fund to buy the country some time, Bloomberg News reported. IMF officials are visiting Buenos Aires and will give their recommendation within weeks on whether to disburse another $5.3 billion to the country from a record bailout approved in 2018.

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Avianca Holdings SA plunged to a record low after the Colombia-based airline’s chairman was seen in a leaked internal video telling employees that the company is “bankrupt,” Bloomberg News reported. The stock dropped as much as 15% in Bogota trading before paring losses. Kriete was trying to reiterate to employees the urgency of getting back to profitability, said Carlos Enrique Rodriguez, head of equity research at Bogota-based brokerage Ultraserfinco.

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Argentine executives and graduates shocked by President Mauricio Macri’s drubbing in elections this month have begun calling and emailing in droves in search of work in Brazil, Chile and Colombia, head hunters and visa advisers told Reuters. Executive search specialists say the resumes that have deluged their offices in those countries reached a peaked after Macri lost ground to a centre-left Peronist challenger in the Aug. 11 primary elections, causing the peso to plummet in value, Reuters reported. Leftist Alberto Fernandez is now the front-runner ahead of an Oct.

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The International Monetary Fund’s record loan to Argentina last year was supposed to turn the page on a troubled history, Bloomberg News reported. It’s looking more like a case of déjà vu. Less than two decades ago, Argentina crashed out of an IMF program, defaulted on debt and plunged into depression. As Fund officials arrived in Buenos Aires over the weekend to assess the country’s current $56 billion bailout –- and decide whether to keep doling out cash -- some of the same warning signals are flashing.

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Brazilian conglomerate Odebrecht SA, which has been in bankruptcy protection since June, has proposed to creditors a swap of their debt for instruments similar to equity, according to a statement issued on Monday, Reuters reported. The instruments would give creditors the rights to receive proceeds of the asset sales and future profits of the companies controlled by the conglomerate. The plan, which the statement said Odebrecht filed with the court late on Monday, has no explicit discount on the 51 billion reais ($12.4 billion) debt that is being restructured.

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Trading Argentine bonds has become a test of endurance as the prospect of a possible default triggers wild price swings and volume dries up, Bloomberg News reported. The Liquidity Assessment Scale of 1 to 100 (100 being the most liquid) slumped to 12 on Wednesday for the South American nation’s bonds from 68 just three weeks ago. “There is a lot of hysteria in the market and it is causing a lot of uncertainty on valuations,” said Jason Devito, a Pittsburg-based money manager at Federated Investment Mgmt Co., which has $502 billion under management.

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A Brazilian judge on Wednesday ruled that Imcopa, one of the country’s largest processors of non-genetically modified soybeans, will no longer be able to enforce early termination of a lease agreement related to two soy crushing plants, Reuters reported. Imcopa has been going through a bankruptcy reorganization since 2014 and wants to sell the plants to pay back creditors. Last week, Imcopa terminated a 10-year lease on the two plants with brewer Cervejaria Petropolis SA, prompting the beer maker to seek legal remedies.

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Less than two years after Argentina made a splash in markets by selling a $2.75 billion, 100-year bond, another debt restructuring is a real possibility after President Mauricio Macri was routed in a primary election, Bloomberg News reported. Money managers and analysts from firms including Citigroup Inc. and Bank of America Corp. say investors are likely to recoup less than 40 cents on the dollar on its notes if Argentina reneges on its debt for the third time in two decades.

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The cost of insuring against an Argentine sovereign default climbed on Tuesday as Hernan Lacunza was sworn in as the new treasury minister of the crisis-hit country, Reuters reported. Argentine 5-year credit default swaps (CDS) were quoted by IHS Markit at 2,990 basis points (bps), up 77 bps from Monday’s closing level of 2,913 bps. Markit calculations, based on Monday’s closing prices, estimate a 82% probability of a sovereign default within the next five years.

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