South America

Senior secured bondholders of Colombian airline Avianca could recover 45% of their principal if they provide debtor-in-possession (DIP) financing to the company, which has been in chapter 11 bankruptcy proceedings since May.

With the world’s most important asset managers taking a more active role in sovereign debt restructuring negotiations, the once niche topic of collective action clauses (CACs) is set to rise up the capital markets agenda as participants debate whether adjustments made by Argentina and Ecuador to the 2014 ICMA CACs should become common practice.

Colombian airline Avianca’s senior secured bondholders will be able to recover around 45% of their principal if they agree to provide debtor-in-possession (DIP) financing to the company, which has been in Chapter 11 bankruptcy proceedings since May.

Holders of the Province of Neuquén’s unsecured bonds due in 2025 said on Tuesday that they had organised to “defend and protect” their rights as they followed the Argentine region’s secured creditors in rejecting its exchange offer.

Argentina finally filed its official updated debt restructuring proposal this week and, as expected, drew the support of bondholders. But the bigger news may be in the small print, as sovereign debt experts immediately began to examine the changes implemented to the bonds' collective action clauses (CACs).

A group of bondholders holding more than a quarter of the Province of Neuquén’s senior secured bonds said on Friday that they “categorically” reject the Argentine regional government’s restructuring proposal.

Real money investors have historically avoided the reputational risk involved in participating in sovereign debt restructurings. But a truly socially responsible investor should embrace these situations — for the sake of both their clients and troubled emerging nations.

Entre Ríos will become the latest Argentine province to begin negotiations with bondholders after the national government’s restructuring agreement last week left the path clearer for provincial issuers.

Chilean state railway operator Empresa de los Ferrocarriles del Estado (EFE) debuted in international bond markets on Tuesday, achieving the lowest yield ever achieved by a Latin American corporate on a 30 year issue on the back of an eight times oversubscribed order book.

Real money investors have historically avoided the reputational risk involved in participating in sovereign debt restructurings. But a truly socially responsible investor should embrace these situations — for the sake of both their clients and troubled emerging nations.

Latin American development bank Corporación Andina de Fomento (CAF) raised Sfr350m ($382m) of five year paper on Monday with its first green bond issue in the Swiss franc market.

Argentine oil and gas company Compañía General de Combustibles (CGC) is looking to tackle a looming bond maturity with an exchange offer, following the example of YPF and Telecom Argentina.