Word: argentinas
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...debt of $80 billion; soon thereafter Brazil declared that it was unable to meet payments on its $87 billion borrowings. Last week Brazil told its foreign creditors that it would not make $446 million in payments on principal due in January, but denied that this amounted to a moratorium. Argentina, too, was in the headlines: about five months behind in interest payments on its debt of more than $40 billion, it encountered a delay in securing a crucial $1.1 billion bailout loan from international banks...
Their loans to developing nations and the East bloc now amount to about $130 billion, including $68 billion to Latin American and Caribbean countries. At midyear $52 billion had been loaned to Mexico, Argentina and Brazil alone...
...compared with shareholders' equity, which, coupled with loan-loss reserves, can be thought of as what a bank would have left if it paid off its depositors and creditors. New York's Chemical Bank, for example, has $1.4 billion on loan in Mexico and $370 million to Argentina, a sum amounting to 92% of its shareholders' equity. Chase Manhattan has loans totaling $2.5 billion to the two countries, 77% of stockholders' equity, and New York's Citicorp, which refuses to confirm the exact figures, has a reported $4 billion, or 85%. On top of that...
...help cautious investors, the U.S. Securities and Exchange Commission has asked the banks to disclose publicly their potential foreign loan problems. As a result, in their third-quarter reports to the commission, the banks with large loans to Mexico and Argentina were, in effect, forced to reveal their total exposure for the first time. But the disclosures are still incomplete because the SEC did not ask the banks to tell what portion of their loans is to private borrowers as opposed to governments...
...boosted world interest rates to new postwar highs, while declining inflation in the U.S. and a rush of foreign money into the country strengthened the dollar. No longer could loans be paid off with ever less expensive greenbacks. Quite the contrary. Moreover, since the biggest borrowers-Argentina, Brazil, Mexico and South Korea-carried floating interest-rate tags (which change with prevailing rates) on most of their loans, servicing costs climbed out of sight. Between 1976 and early 1982, the London Interbank Offered Rate (LIBOR), against which most international borrowing is set, zoomed from 6% to 15%. Each 1-point rise...