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NEW YORK, July 16 (IFR) - Bonds of Brazilian telecoms company Oi rallied Wednesday, after partner Portugal Telecom was forced to reduce its stake in a planned merger after a holding company of the Espirito Santo family failed to pay more than US$1bn owed to the Portuguese telco.
Oi bonds rose by as much as 2.5 points in early trading, with the 2020s quoted at a cash price of 100.00-100.75 and the 2022s quoted at 98.75-99.50, according to traders.
The failure of Rioforte, which holds some of the Espirito Santo family's major assets, to repay 847m (US$1.15bn) in short-term debt owed to Portugal Telecom has forced the latter to reduce its stake in the merger to 25.6% from the 38% originally agreed. (Reporting by Davide Scigliuzzo; Editing by Natalie Harrison)