Related content
Companies / Entities
- Banco de la República de Colombia
- Citibank, N.A.
- SUDAMERIS BANK S.A.E.C.A.
- Banco Santander, S.A.
- Banco do Brasil S.A.
Keywords
Other | Government/RegulationsResearch Reports
Facebook
Delicious
Digg
Yahoo
MeneameSeveral international banks have reached a deal with Paraguay's government over US$21mn in outstanding bond payments, a central bank spokesperson told BNamericas, confirming local press reports.
The terms and conditions of the debt allow bondholders to exercise a "put" option every year until maturity in 2005. International and local banks exercised the option in December of last year, but the government did not have enough cash on hand to pay.
A host of international banks including Citibank, Sudameris, SCH (NYSE: STD), Banco do Brasil and Banco de la Republica de Uruguay have now agreed to accept 30% partial payment and the balance when the bonds come due in 2005, the spokesperson said.
Other banks such as ABN Amro (NYSE: ABN) and Spain's BBVA (NYSE: BBV) opted instead to accumulate interest on the full balance until 2005, according to the spokesperson.
The government's failure to pay prompted international rating agency Standard & Poor's to downgrade Paraguay's long-term foreign currency credit rating to a selective default rating SD, from B-.
Although the government is in talks with the local banks that hold the defaulted bonds "full repayment of this debt seems unlikely in the coming weeks" given the Paraguayan government's limited liquidity, S&P sovereign analyst Sebastian Briozzo said.
Mirroring the actions of Japanese authorities when rival rating agency Moody's downgraded Japan last year, the Paraguayan authorities have come out strongly against S&P's latest rating action. Finance minister Alcides Jimenez told local press last week the downgrade is banks' way of getting even, through S&P, for a government decision in January to transfer public deposits from private banks to the central bank in a bid to curb speculation against the local currency.
According to S&P, the government is finding it difficult to secure alternative sources of financing to cover both the fiscal deficit, estimated at around 3% of GDP for 2003 or about US$120mn, and US$100mn in maturing debt.
Paraguay's economy contracted 2.2% in 2002 due in part to financial woes in Argentina and Brazil. After four years of almost zero-growth the economy is expected to recover this year, growing 1.5% according to the central bank's preliminary forecast.
0
Comentarios