South America

Speculation about consolidation is a staple in Brazil’s highly competitive, fast-growing telecom sector. Now, conditions may be ripe for action. NII Holdings Inc. has skyrocketed this year in New York trading, signaling that investors are stepping up their M&A bets as two favorite targets finish actions that could pave the way for deals, Bloomberg News reported. Nextel Telecomunicacoes Ltda., NII’s Brazilian unit, concluded a debt restructuring and is in better shape to be acquired as the country slowly exits a long recession.
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Oi SA, Brazil’s largest fixed line telecom firm, called a general shareholders’ meeting on Sept. 3 in Rio de Janeiro to formally vote on a 4 billion reais ($1.07 billion) capital injection, the company said, Reuters reported. In a securities filing made late on Wednesday night, the firm said shareholders would also consider the composition of a new board of directors and a number of by-law changes, confirming a Reuters report earlier in the day which said Oi would send the invite for the meeting as early as this week.
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In a related story, Reuters reported that Brazilian telephone carrier Oi SA said on Wednesday that a judge in Lisbon had decided against validating the company’s restructuring plan in Portugal for now, adding that the decision will not keep the plan from going into effect. In a securities filing, Oi said a judge determined that there are outstanding appeals related to the firm’s restructuring of 65 billion reais ($17.4 billion) in debt that must be resolved before the Portuguese court signs off on the plan.
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Oi SA, Brazil’s largest fixed-line telecom firm, is about to formally call for a general shareholders’ meeting, a source with direct knowledge of the matter told Reuters, as the company pushes ahead with its aggressive restructuring plan. According to the source, who requested anonymity to discuss the matter before the announcement, the firm plans to file a formal invite for the meeting to officially approve a 4 billion reais ($1.07 billion) capital injection into the firm this week or next, Reuters reported.
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Italian utility Enel SpA has called a halt to further acquisitions in Brazil for the time being as it gears up to complete asset sales of up to 1.5 billion euros (1.34 billion pounds) in the second half of the year, the International New York Times reported on a Reuters story. "I don't see appetite for further acquisitions in Brazil at this stage," Enel CEO Francesco Starace told analysts on a conference call on Tuesday after the company released first-half results.
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Is growing corporate debt a bubble waiting to burst? Globally, debt of non-financial corporations has grown by $29tn in the ten years since the financial crisis, nearly as much as the growth in government debt, the Financial Times reported. But while a market correction is likely, this growth is not as ominous as it might seem. Look no further than the bull market in corporate bonds that has emerged over the past decade. The shift to bond financing by companies is a welcome diversification in financial markets, giving large corporations an alternative to bank loans in financing.
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Three distressed asset funds have sued for the right to participate in a 4 billion reais ($1 billion) capital increase for Brazilian telecom Oi SA as part of its in-court restructuring, four sources with knowledge of the matter told Reuters this week. The fight for the chance to invest in Oi, Brazil’s largest fixed line carrier, reveals a sharp turnaround in investors’ perception of a company that flirted with liquidation a year ago, Reuters reported.
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The world oil market is notoriously quick to react to headlines, but a seemingly significant one last week from the owner of the world’s largest reserves didn’t cause so much as a blip, The Wall Street Journal reported. According to reports, all from Venezuelan authorities, the China Development Bank earlier this month pledged either $250 million or $5 billion “in favor of the increasing and strengthening of the country’s oil production.” That Venezuela’s major industry needs “increasing and strengthening” is beyond question.
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A recent run on the peso is pushing inflation ever higher. Prices could rise by as much as 30 per cent this year — or about triple the rate that President Mauricio Macri was hoping for in 2018. But for most Argentines, this is business as usual, the Financial Times reported. With the exception of a currency board experiment in the 1990s that ended with a disastrous financial crash in 2001, Argentines have lived with punishingly high inflation for longer than most can remember.
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Signs are mounting that Argentina is headed toward recession in the next few months, less than two years after emerging from the latest one, Bloomberg News reported. A severe drought and currency crisis shook Latin America’s third-largest economy just as President Mauricio Macri sought to consolidate its incipient recovery. Economic activity fell 2.7 percent in April, the largest monthly decline since Macri took office in December 2015. Growth also declined on an annual basis for the first time in 14 months, the nation’s statistics agency reported Tuesday.
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