Business & Banking

Mar 1, 2003

AES Hits Second Default in Brazil

The Brazilian subsidiary of global power company AES Corp. in late February defaulted on a $330 million payment due to the government's BNDES development bank. As a result, BNDES may assume AES's stake in Eletropaulo Metropolitana, Latin America's largest utility that distributes power in the city of São Paulo.BNDES has the right to demand immediate payment of $605 million after AES missed a February 28th deadline for payment. The company said that other creditors accepted its offer to wait until April 15th for a $6.5 million payment. Virginia-based AES also missed a $35 million payment in January and still owes BNDES $1.2 billion for loans it took out to buy control of Eletropaulo and unwind a post-privatization cross-shareholding arrangement with Rio de Janeiro based Light.AES wants BNDES to restructure its Brazilian debt because last year's 35% decline in the real cut Eletropaulo's ability...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management