Sunday, September 14, 2014

Latin American Insolvency News


Fri., September 12, 2014
Argentina's Congress on Thursday passed a new bill designed to enable the government to resume debt payments to bondholders in defiance of a U.S. court ruling which tipped the country back into default, Reuters reported. President Cristina Fernandez's leftist government is in a race against the clock to make a $200 million coupon payment due on Sept. 30 to prevent the default spreading across bond series, which could raise the risk of investors calling for immediate payment on the principal value of their bonds. But she needs to route the funds through channels beyond the reach of the U.S. judge who ruled that Argentina must settle a legal fight with a group of New York hedge funds over unpaid debt from a massive 2002 default before servicing its performing debt. After an overnight debate, the legislature's lower house passed the bill under which the government could make payments on an estimated $29 billion in foreign-held bonds either in Argentina or elsewhere out of U.S. jurisdiction. It also encourages investors to move their Argentine debt from the United States and other foreign jurisdictions to either Argentina or France via an exchange of debt. Fernandez later on Thursday signed the bill into law, asserting it would enable Argentina to pay all its creditors....
Fri., September 12, 2014
President Nicolas Maduro said Venezuela could meet all its obligations to bondholders, as he sought to quell market fears that the Socialist-run country may opt to default when $5 billion of its foreign debt falls due for repayment next month, Reuters reported. Fears of a possible default had heightened, with bond yields spiking, after the publication of an article by two pro-opposition economists that suggested an orderly default could ultimately help the slumping economy of a member of the Organization of the Petroleum Exporting Countries. "We're prepared to meet our international obligations in their entirety," Maduro declared on Wednesday night. "Down to the last dollar." Speaking at an event attended by industrialists, Maduro criticized what he deemed an international campaign to sully Venezuela. Like his predecessor, the late Hugo Chavez, Maduro often accuses the United States or financial speculators of trying to ruin the self-styled socialist experiment....
Fri., September 12, 2014
Banco Espírito Santo secretly lent money to its controlling shareholder for two years, documents have revealed – raising fresh questions over the Bank of Portugal’s supervision of a lender that went on to suffer one of Europe’s largest financial collapses, the Financial Times reported. BES, then Portugal’s largest listed bank, routed undeclared loans to Espírito Santo International (ESI) – then indirectly its 25 per cent shareholder – through Panama, the documents show. BES did not declare the loans to ESI in its accounts at the time. This exposure to the bad debt of the Espírito Santo family-owned ESI resulted in BES being rescued in August. But while Bank of Portugal said then that it had detected “fraudulent funding” involving non-financial Espírito Santo Group companies, it had not been known until now that a scheme routing loans through Panama had been in place for several years. Fallout from the BES scandal has already prompted changes at the Bank of Portugal, which this week replaced the official in charge of prudential supervision of banks....

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