...High Default Risk: Defaults are at a level not seen for the past decade, with eight issuers defaulting on USD4.5 billion of debt. About one-third of the defaults YTD are related to Brazilian construction companies tied to the Petrobras Lava Jato scandal. The list of these issuers includes Ceagro, Cimentos Tupi, Galvao Participacoes, GVO, IMPSA, OAS, and Schahin. No Relief in Sight: Downgrades will continue to outpace upgrades for the 50 largest high-yield Latin America corporates, as 34% of the issuers have either a Negative Outlook or are on Watch Negative. Pressure on government revenues has led to tax measures that have weakened consumers and hurt corporate cash flow. Consumer confidence will remain weak and unemployment levels will climb. Nine `BB'-rated issuers were downgraded to the `B' category during 2015. Corporates React to Stress: Issuers have slashed capex and cut dividends in an effort to conserve cash. As a result, the median FCF margin for `BB' issuers has improved to negative...
