South America

The International Monetary Fund on Saturday confirmed it had approved $643 million in emergency assistance for Ecuador, but said the Andean country would need additional support from other external partners to respond to the coronavirus pandemic, Reuters reported. The outbreak of the novel coronavirus and plummeting oil prices and global demand were having a devastating effect on Ecuador, one of the largest oil exporters in Latin America, said IMF Managing Director Kristalina Georgieva.

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Argentina is willing to keep working toward a deal to restructure its debt if an offer that expires on Friday is rejected, the economy minister said. Economy Minister Martin Guzman told Argentine daily Clarin in an interview published on Sunday that he is seeing a “growing understanding” with bondholders ahead of a May 8 deadline for the offer that creditor groups already criticized, Bloomberg News reported. “We believe that the process in these days has been positive, yet it is still lacking and the dialog will continue,” Guzman said.

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Some of Argentina’s key creditors are rejecting invitations to speak with the nation’s finance team this week as both sides jockey for more favorable terms in a $65 billion debt restructuring, Bloomberg News reported. Tensions are building as the clock counts down on two key deadlines: May 8 for a debt-exchange offer and May 22, when a 30-day grace period for coupon payments on dollar bonds maturing in 2021, 2026 and 2046 expires. To close a deal, the South American nation needs support from creditors owning at least two-thirds of the aggregate holdings.

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Argentina’s latest effort to restructure its overseas debt probably won’t be its last, according to Harvard University economist Carmen Reinhart, who has sounded alarms over coming emerging markets crises in Venezuela and Turkey, Bloomberg News reported. If anything, she said in an interview, Argentina’s initial offer merely kicks the can down the road. It will need to be revisited in a few years given the impact of the pandemic on the global economy, she said.

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Argentina and the province of Buenos Aires will start setting up virtual meetings this week with institutional investors as they continue the process of restructuring more than $76 billion in debt, according to people familiar with the plan, Bloomberg News reported. The national government will call on about 20 institutions and funds -- including BlackRock, Ashmore and Fintech’s David Martinez -- to present its offer to restructure $69 billion in debt, the people said asking not to be named because the the plan isn’t public yet.

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A previously unreported Brazilian court injunction last month has thrown a wrench into Bunge Ltd’s plan to take over two soy processing plants from local crusher Imcopa, according to court filings seen by Reuters. The injunction was granted on behalf of two Panamanian entities identified in the filings as “third parties,” Reuters reported. It effectively suspended a bankruptcy court auction in which Bunge had bid a combined 50 million reais ($9.16 million) for the plants. The Feb.

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Argentines are flocking to buy black-market dollars as real interest rates sink below zero and fears mount of yet another chaotic sovereign debt default, Bloomberg News reported. The peso weakened to a record 118 pesos per dollar in informal exchange houses known as “caves” Thursday, up from 107 the previous day, according to people with direct knowledge of the matter. That’s even higher than the blue-chip swap rate, another parallel rate derived from buying securities locally and selling them abroad.

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Developing countries need about $1 trillion in debt canceled to free up funds to fight the coronavirus pandemic and avert a massive debt crisis, the United Nations said, Bloomberg News reported. Immediate payment waivers coupled with a debt overhaul will help countries stay solvent in the face of as much as $3.4 trillion in obligations due this year and next, according to the UN’s trade and development agency, UNCTAD. The total debt stock of developing countries -- external and domestic, private and public -- stood at 191% of gross domestic product by the end of 2018.

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Argentina failed to make a $503m payment due on Wednesday, setting the clock running on what is expected to be a ninth sovereign default, the Financial Times reported. The decision came one day after economy minister Martín Guzmán said that Buenos Aires “will not be able to make [any] debt payments in the coming days”. By failing to pay, the government marked the beginning of a 30-day grace period during which Argentina must pay up to avoid defaulting on $65bn of foreign debt owned by private creditors.

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Creditors of Brazilian corruption-ensnared conglomerate Odebrecht SA have approved debt restructuring plans of 12 of its subsidiaries, after an online assembly that lasted more than eight hours, Reuters reported. Odebrecht’s lawyer Eduardo Munhoz said the plans approved on Wednesday represent the restructuring of more than 99% of the 53 billion reais ($9.7 billion) of the conglomerate’s debt. Percentages of creditor approval were high for all companies with votes on Wednesday, he added.

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