South America

The Brazilian central bank, concerned by a deepening scarcity of funding for small- and mid-sized lenders, is considering creating a fund to invest in sales of loan-backed receivables, O Estado de S. Paulo newspaper reported on Monday. So-called mid-cap banks are responsible for about 220 billion reais ($108 billion) in loans, or about 10 percent of Brazil's total outstanding lending, the report said. Banks in that segment are facing a dearth of funding in the wake of the central bank's seizure of Banco Cruzeiro do Sul for alleged accounting irregularities.
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Brazilian debt-laden power distributor Celpa and creditors halted dent restructuring talks in order to allow the company to negotiate a sale to rival Equatorial Energia, an official told Reuters on Monday. Mauro Santos, the official in charge of overseeing Celpa's bankruptcy protection filing, said in an interview that talks will remain suspended until August 9. Equatorial said recently that it entered exclusive talks with Celpa over a potential sale. Read more.
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Brazil’s consumer loan default rate rose to the highest in 30 months, reinforcing concerns that households struggling with debt could further dent Brazil’s credit-driven growth model. The consumer default rate in May rose to 8 percent, from a revised 7.8 percent in April, the central bank said in a report distributed today in Brasilia. The default rate on company loans remained unchanged at 4.1 percent, Bloomberg reported.
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Equatorial Energia, a Brazilian power holding company, and private-equity fund GP Investiments expressed interest in buying all or part of debt-laden power distributor Celpa, according to a securities filing on Tuesday, Reuters reported. Celpa, a unit of power company Rede Energia serving the northern state of Pará, filed for bankruptcy protection in February, citing a deterioration in its finances. The company presented a debt restructuring plan last month to a court in that state to win Celpa more time to pay its debt.
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Brazil's debt-laden power distributor, Celpa, proposed a 40 percent reduction in the value of its liabilities as part of a debt renegotiation proposal seeking to stave off bankruptcy, according to a court document released on Monday, Reuters reported. Celpa, controlled by electricity holding company Rede Energia, plans to raise 650 million reais ($337 million) through the sale of local debt notes that can be converted into shares after a certain period, the document said. The plan also includes Celpa's obtaining 200 million reais in fresh credit lines through the end of 2013.
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Spanish oil heavyweight Repsol YPF SA has lost nearly one-fifth of its valuation after Argentina's move to seize control of YPF SA sliced off a huge chunk of the company's production and earnings. Yet, two weeks after the Argentine bombshell, some investors and analysts are starting to devise a potential upside scenario for the battered Spanish company, The Wall Street Journal reported.
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A group of Brazilian and foreign investors led by buyout firm Laep Investments may bid for Brazilian power distributor Celpa, betting that a bold turnaround could save the debt-laden company from near-bankruptcy. Laep, a private equity firm that invests mainly in distressed companies, may team up with two energy funds from the United States and one from Canada to bid for Celpa, Luiz Cezar Fernandes, chief executive for São Paulo-based Laep, told Reuters. He declined to elaborate on potential terms.
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A YPF bond due in July next year is likely to default, and while Repsol YPF SA should escape a similar fate, this prospect could be yet another headache for the Spanish company after YPF's operations were seized by Argentina's government last week. Analysts expect that YPF's nationalization will almost certainly lead to a default on its bonds. Argentina's proposal to take over 51% of YPF would cut Repsol' stake to just 6% from 57% currently. Repsol, which denounced the takeover, has vowed to take the dispute to court.
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Argentina’s billionaire Eskenazi family risks default on more than $2 billion of debt after the government seized control of oil company YPF SA and said dividends would probably be reinvested in the company, Bloomberg reported. The family’s Petersen Group, which has 25 percent of YPF, owes Spanish partner Repsol YPF SA 1.45 billion euros ($1.9 billion) after it bought a stake in YPF, the Madrid-based company said April 16. The Eskenazis counted on YPF dividend payments of as much as 90 percent of profit to repay Repsol and about $680 million of loans with banks including Citigroup Inc.
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President Cristina Kirchner, in a move that marks a watershed in expanding the state's grip on the economy, said she will send a bill to Congress to nationalize Argentina's largest oil-and-gas company, YPF SA, The Wall Street Journal reported. The move fired up a battle with the company's Spanish controlling shareholder and the Madrid government. Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain.
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