South America

The head of the International Monetary Fund called on private creditors to join the Group of 20 in providing debt relief for the world’s poorest nations, saying that the alternative to suspension and restructuring is defaults, Bloomberg News reported. A debt-service suspension would provide time for restructuring debt on a case-by-case basis in countries where debt sustainability needs to be restored, Managing Director Kristalina Georgieva said in a webcast with the U.S. Chamber of Commerce Tuesday.

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Argentine President Alberto Fernandez dipped into the play book of his deputy, Cristina Fernandez de Kirchner, with a plan to seize crop trader Vicentin SAIC in a move that’ll ring alarm bells in soy markets and among investors in the country, Bloomberg News reported. Fernandez’s government will take control of Vicentin for the next 60 days as it seeks congressional approval to expropriate the agricultural powerhouse, which filed for bankruptcy last year after being caught out in currency swings.

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Emerging and developing economies will shrink this year for the first time in at least six decades, according to the World Bank, underscoring the mounting economic toll from the coronavirus pandemic as it spreads across the world, the Financial Times reported. The bank’s forecast is that as many as 100m people in the developing world will be tipped into extreme poverty by a projected 2.5 per cent contraction in emerging markets’ gross domestic product, with incomes per capita set to shrink 3.6 per cent globally. The bank defines extreme poverty as an income of less than $1.90 a day.

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Argentina’s Mendoza province, famed for its bodegas and Malbec grapes grown in the shadows of the Andes, has formally launched a debt restructuring process after missing an initial payment deadline on a 2024 bond, Reuters reported. The regional government said in a statement on Friday that it had opened an invitation to holders of around $590 million of the 2024 notes, which could see new debt instruments issued. The missed payment is still within a grace period.

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Investors holding several of Ecuador's sovereign bonds said Thursday that they had formed a committee to conduct talks with the government over a debt restructuring plan as the nation grapples with the COVID-19 pandemic, LatinFinance reported. "The committee is representative of Ecuador's bondholder base and includes holdings across each series of the bonds," the institutional bondholders said in a statement. The committee added that it has hired BroadSpan Capital and UBS as financial advisers in the negotiations.

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Argentina's Buenos Aires province extended on Thursday the deadline for debt restructuring talks with its creditors to June 19, saying there could be room for negotiation with its creditors, WHTC reported. The province pushed out the deadline, previously set for Friday, after failing to reach a deal with bondholders, but said in a statement that it would "intensify the dialogue with investors who have not yet accepted the proposal" for about $7.148 billion in debt.

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Simultaneously grappling with surging deaths from Covid-19, recession and a weak currency, Brazil at least won’t have problem finding dollars to pay for imports and service its foreign debt in the aftermath of the pandemic, Bloomberg News reported. As Brazilians stop traveling and spending money abroad, the country’s long-running current account deficit is narrowing fast and could even become a surplus this year. In April alone, it was a positive $3.8 billion, the highest ever according to data compiled by Bloomberg.

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As another debt deadline came and went this week, Argentina found itself in a familiar place: immersed in recession, beholden to the International Monetary Fund and at cross purposes with private lenders. If the coronavirus pandemic has bought Argentina some international indulgence, as the IMF made clear in a statement on June 1, it hasn’t eased the country’s burden or lifted uncertainty, Bloomberg News reported. Argentina surely deserves debt relief, but also a credible way forward. Borrower and creditors alike reckon that a deal will emerge; they have been inching closer for weeks.

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IMF officials say Argentina can still improve its restructuring offer on $65bn of debt with foreign creditors as it continues negotiations after slipping into default last month, the Financial Times reported. “There is still room for Argentina to increase payments to private creditors,” Julie Kozack, deputy director for the IMF’s western hemisphere department, told the Financial Times on Tuesday.

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Ecuador is kicking off the first round of creditor talks this week with the goal of releasing an initial debt restructuring offer as early as late June, according to people with direct knowledge of the matter, Bloomberg News reported. President Lenin Moreno’s administration is pressing to avoid a hard default and to regain access to credit markets. The South American nation plans to convene a call with its biggest bondholders, including a group led by BlackRock Inc.

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