South America

Argentina will be forced to default by 2011 unless the government reaches an accord with investors holding $20 billion of bonds kept out of the last restructuring offer, Stone Harbor Investment Partners says. President Cristina Fernandez de Kirchner is negotiating terms of an agreement, which the government needs to regain access to international capital markets that it lost after stopping payments on $95 billion of debt in 2001, Bloomberg reported.
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Argentina, hoping to sell bonds on international markets again, is trying to clean up the fallout from its $100 billion debt default in 2001 and 2002, Reuters reported. In 2005, the government asked investors to accept steep losses on Argentine bonds, a proposal rejected by about a quarter of bondholders. Argentina has not been able to issue debt on global markets since the default, partly because of lawsuits from so-called holdouts who rejected the restructuring.
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In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar, BusinessWeek reported.
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Argentina needs to be in an International Monetary Fund program to conduct talks on restructuring its debt with the Paris Club of sovereign creditors, French Economy Minister Christine Lagarde said on Sunday. Argentina owes some $6.7 billion in defaulted debt to the club. It wants to resolve the issue as part of an effort to get relations with the international community back on track after the country's 2001-2002 economic crisis. The country can either repay the debt in full, or seek a restructuring, which usually requires a country to be in an IMF program.
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Credit Suisse Group is trying to sell a $1 billion claim it holds against bankrupt Lehman Brothers Holdings Inc, Bloomberg News reported on Thursday, citing people familiar with the matter. Hedge funds and private equity firms would be among the potential buyers for the Credit Suisse claim, which is tied to about 20,000 derivative contracts, Bloomberg reported. Banks and investors have been selling their claims on Lehman for increasingly higher prices in the last few months.
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The World Trade Organisation is expected to rule on Friday that billions of dollars in European government subsidies for Airbus aircraft are illegal, the Financial Times reported. That would hand victory to the US and Boeing, in the first round of a WTO dogfight between the world’s biggest aircraft manufacturers. The preliminary ruling, is likely to spur Washington to launch a WTO challenge to further government loans for Airbus to develop its new €11 billion ($16 billion, £10 billion) A350 extra wide-bodied airliner which will compete with Boeing’s long-delayed 787 Dreamliner.
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CanWest Global Communications Corp.'s efforts to restructure its debt have come up against a series of glitches in the past few weeks that are delaying a deal with bondholders, The Globe and Mail reported. At the top of that list may be the most unlikely of culprits – a television show called MasterChef Australia. The popular cooking program has been a major hit on Australian television this year. That has translated into gains on the Australian stock market.
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A group of 1,524 cattle ranchers said they would reject a debt-reduction plan by Brazilian beef processor Independencia to exit bankruptcy proceedings, Valor Economico reported Friday. Independencia, which filed for bankruptcy protection in early March, offered to cap debt payments to ranchers at 80,000 reais (US$43,550), Valor said. That makes up for an estimated 120 million reais in total payments for the ranchers. But they instead are demanding a total 330 million reais be paid as part of any renegotiation accord or will halt supplies to the company, Valor said.
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Zinc companies in Peru, the world’s third-largest producer, will look to sell more concentrates overseas after the government said smelter Doe Run Peru may file for bankruptcy, according to a creditor, Bloomberg reported. A bankruptcy may take months to complete, said Carlos Galvez, chief financial officer of precious metals producer Cia. de Minas Buenaventura SA, a Doe Run Peru creditor. Doe Run, a unit of Renco Group Inc., may file for bankruptcy to restructure about $156 million of debt, Energy & Mines Minister Pedro Sanchez Gamarra said yesterday.
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Foreign-exchange traders are losing faith that Mexican President Felipe Calderon will push through the tax increases needed to rein in the budget deficit and stem a rout that has made the peso the worst-performing major currency in the past year, Bloomberg reported. Morgan Stanley strategists say Latin America’s second-largest economy is headed for “unsustainable” deficits as oil output declines while RBC Capital Markets advises investors to sell the currency.
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