Telebras (TBH) & Brazil Message Board

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Strategies & Market Trends : Telebras (TBH) & Brazil

TBH 0.956

-0.1%

Nov 25 3:59 PM EST

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To: Steve Fancy who wrote (11557)	1/13/1999 7:50:00 PM
From: Fernando Saldanha	Read Replies (1) of 22640

The devaluation was not well received by market participants. Most favored a 20-25% percent devaluation with a zero-slope peg. Instead they devalued by 9% and reduced the slope from 8% per year to 3% per year. The problems are: 1) the currency is still overvalued, and 2) the positive slope is still a hurdle for domestic interest rates, although smaller than the previous 8% slope. Outflows were less than $2 billion today but they may not be so lucky tomorrow. There is a chance this new scheme will not last one full week, as massive outflows may force further devaluations or the floating of the currency. The government screwed up (again) and the consequences may be serious. TBH is ridiculously cheap with a P/E of 4.5, but everyone is afraid of further price drops.

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