Wrestling with Restructuring
The deteriorating credit quality of many Latin American debt issuers is raising their financing costs, threatening to push struggling companies over the edge and ignite an unprecedented succession of defaults on corporate bond issues.
Emerging market bond investors have busied themselves for
much of this year debating the implications of an Argentine
sovereign default on the international capital markets.
Nowadays, they are facing an additional worry: the prospect of
Latin companies defaulting on their corporate bonds.
Prior to the September 11 terrorist attacks, Argentina's
depressed economy was the largest impediment to Latin companies
meeting their financing needs. The attacks dealt a blow to the
already softening US economy and the now deteriorating credit
quality of many Latin American companies is raising their
financing costs. Larger drains on cash threaten to push
struggling companies over the edge and ignite an unprecedented
succession of defaults on corporate bond issues.
Latin American companies have some $2.37 billion in bonds
maturing in the local and international markets before the end
of this year, according to Dealogic Emerging Markets Ware, a
database tracking international and domestic bond
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