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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (6206)	7/31/1998 4:41:00 PM
From: RockyBalboa	Respond to of 22640

TBH Marketmaking is a joke, ... I said it earlier. As I hate them, I shorted a handful of HOLDRs right away (at 125,5 with a 0/15 premium against my TBRs), which saved me some $$$ finally, but I didnt get them back, bidding at the 121,5 ask near close. What about complaints? Anyway, I didnt expect the dive but if it hits you only at half, it is better than nothing. Christian

To: Steve Fancy who wrote (6206)	7/31/1998 4:48:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Telerj (SAO:TERJ4) shares rise Reuters, Friday, July 31, 1998 at 15:15 "Telerj shares fell more than they should have following the auction, so a natural correction of prices kicked in," a trader at Concordia brokerage said. Telerj shares were at their lowest point in more than a month after plunging more than 15 percent in two days. Telemig rose 5.23 percent to 78.50 reais in afternoon trading after hitting its lowest price this year Thursday. "Also news that the buyers of Telerj are looking for new partners helped prices." (Sao Paulo newsroom 5511 248 5408, shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (6206)	7/31/1998 4:53:00 PM
From: Steve Fancy	Respond to of 22640

S&P affirms Brazil's L-term foreign currency debt Reuters, Friday, July 31, 1998 at 15:54 (Press release provided by Standard & Poor's) NEW YORK, July 31 - Standard & Poor's today affirmed its double-'B'-minus rating on the Republic of Brazil's US$58 billion of long-term foreign currency debt and its double-'B'-plus/single-'B' ratings on the Republic's R297 billion of long- and short-term real-denominated debt. Additionally, Standard & Poor's affirmed its double-'B'-minus long-term foreign currency and its double-'B'-plus long-term local currency sovereign credit ratings on the Republic. The rating outlook remains stable. At the same time, Standard & Poor's affirmed its double-'B'-minus rating on Banco Nacional de Desenvolvimento Economico e Social's (BNDES) $3.1 billion of long-term foreign currency debt and its double-'B'-plus local currency issuer credit rating on BNDES. Also, Standard & Poor's has affirmed its double-'B'-minus rating on Banco do Nordeste do Brasil S.A. (BNB) $340 million of long-term foreign currency debt and its double-'B'-plus local currency counterparty credit rating on BNB. The rating outlooks are stable. The stable outlook balances the risks to macroeconomic stability posed by the fiscal deterioration now underway with prospects for an easing of transient spending pressures and a renewed reform effort after the elections. The nominal public sector borrowing requirement could rise to more than 7% before narrowing slightly by year-end. Interest expense, election-driven spending, and excess state spending financed by privatization revenues should diminish slightly. Federal and state privatization revenues will also provide substantial balance of payments and fiscal support short term. However, only decisive action on pending fiscal reforms-most importantly of the hemorrhaging social security system but also of the archaic tax code and inefficient health care system-and a sustained reduction in the large public sector imbalance will secure confidence and safeguard creditworthiness medium term. Brazil's satisfactory external liquidity position mitigates the risk of a balance of payments crisis in the short term despite fiscal imbalances. However, the flexibility to use temporary measures-fiscal, monetary, and regulatory, including capital account regulations-to compensate for fundamental fiscal laxity is diminishing. Therefore, the government elected this October will be challenged to accelerate the pace of fiscal reform. Otherwise, deficit financing will become more complicated and external pressures will mount medium term, ultimately jeopardizing exchange rate policy continuity and creditworthiness. The ratings remain constrained by: -- Profound structural flaws in federal and state finances, the most urgent item on the unfinished reform agenda of the Real Plan. The deficit of the private-sector workers' social security system alone will exceed 1% of GDP this year and could reach 2% next year absent early reform, while public retiree pension benefits consume about another 5% of GDP. Gross central government debt reached 46% of GDP last year, most of which is domestic capital market debt with a short average maturity of seven months. The impact of the social security reform delay should be partly offset by a potential improvement in states' finances driven by: states' debt restructuring agreements; the completion of their privatizations; and the administrative reform amendment, which could reduce spending by 0.5% next year and twice that medium term. -- The limitations of tight monetary policy as the key instrument supporting exchange rate policy. High real interest rates strain public finances, threaten the private banking system's weak asset quality-with an estimated 10% of total loans now nonperforming-and dampen economic activity. In the context of fiscal laxity and difficult market conditions, the reduction in interest rates this year came at the cost of increasing the exposure of public debt to both interest rate and exchange rate risks. Also, periodically intense pressure on the real could continue to challenge exchange rate policy. --- Significant balance of payments vulnerabilities in the medium term. At present, sizable reserves and huge foreign direct investment (FDI) inflows-expected at $23 billion this year-make Brazil's external liquidity position adequate compared with similarly rated sovereigns. Reserves cover an estimated 70% of the total 1998 financing requirement, including the current account deficit, long-term amortization, plus total estimated short-term debt estimated at $48 billion. FDI alone should finance 74% of the current account deficit. This offsets a high debt service burden, which at 44% of exports this year (excluding short-term debt) is more than twice the double 'B' median and among the highest of rated sovereigns. However, current private external borrowing trends, if sustained, will further increase the debt service burden and heighten risks medium term. The high cost of domestic credit has driven a sharp rise in private external indebtedness. Excluding $48 billion in short-term, the stock of private external debt more than doubled in the past two years to $92 billion by March 1998. Gross private external borrowing reached $31 billion in the first half of this year compared with $13 billion in the first half of 1997. The ratings are supported by: -- Public support for the Real Plan-rooted in broadly rising real incomes and the achievement of relative price stability, with inflation expected at less than 3% this year-which allows the authorities some flexibility to take tough economic policy measures. The central bank's de facto autonomy and extraordinarily strong commitment to policy continuity-demonstrated most recently by the decisive response to intense pressure on the real last October and external shocks since then-favorably distinguishes Brazil from similarly rated sovereigns. -- A massive privatization program. Revenues of $17 billion last year and an expected $28 billion this year provide a financial bridge to fiscal consolidation and long-term balance of payments sustainability. Total multiyear privatization revenues of more than 10% of GDP will reduce the stock of domestic debt by almost as much. Moreover, privatization and ongoing deregulation should improve economic efficiency, strengthen long-term export prospects and, as in Argentina, gradually help offset the accumulated real effective appreciation of the currency. -- Pragmatic, effective monetary management relative to most speculative-grade-rated sovereigns. Despite four years of substantial fiscal imbalances, monetary policy has driven inflation from quadruple digits to less than 3% this year. At the same time, the careful use of incentives and disincentives for export credit and other capital flows has helped protect reserves even under extreme market pressures. -- A strong and relatively liquid corporate sector compared with similarly rated sovereigns. The exposure of the corporate sector to potential interest rate and exchange rate fluctuations is somewhat mitigated by its strong export base, relatively low leverage, and prospects for continuing productivity gains, Standard & Poor's said. OUTLOOK: STABLE Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (6206)	7/31/1998 5:02:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs close down following Wall Street dips Reuters, Friday, July 31, 1998 at 16:54 SAO PAULO, July 31 (Reuters) - Brazilian shares closed off 2.12 percent as a decline in U.S. stocks undermined optimism over the successful privatization auction of telephone monopoly Telebras (SAO:TELB4) earlier this week. "The market has a bit of a hangover after two days of partying," said a trader at a local brokerage. Sao Paulo's key Bovespa stock index fell to 10707 points at the market's close, reversing two days of gains. Telesp (SAO:TLSP4) closed off 4.32 percent to 288.01 reais. "It was a slight correction in line with a falling Dow Jones," a trader at a local brokerage said. The Dow Jones Industrial Average was slipping more than 1.5 percent when the Brazilian market closed. Telesp led the market lower reflecting reports that its new owners were feuding. Spain's Telefonica (MADRID:TEF) said it will negotiate its partnership with Brazilian media group RBS in a consortium that bought Telesp Participacoes, a spokesman said. The 12 units that were carved out of Telebras were sold for $19 billion Wednesday, sending most telecom stocks soaring. Telebras slumped 2.63 percent Friday after the Dow Jones and turned down. Investors were also repositioning themselves as the post-privatization euphoria settled, traders said. "This is an adjustment period for telecoms," a trader at a local brokerage said. "People are looking at what's the best buy instead of who got the highest premium." Telesp Celular (SAO:TSPC6) preferred closed off 4.4 percent to 119.50 reais, while Telerj (SAO:TERJ4) and Telemig (SAO:TMGR6) fixed-line phone companies rallied after two days of sharp losses. The companies closed up on news that the new owners of the Tele Norte Leste holding company, which controls the phone operators in the region, are in talks with a foreign operator and pension funds to take over stakes. Telerj preferred rose 2.37 percent to 81.90 reais and Telemig preferred rose 3.22 percent to 77.0 reais. The shares plummeted after a Brazilian investment group led by construction firm Andrade Gutierrez won bidding for the Telebras unit. Investors were concerned they would face investment problems and operational problems because they didn't have an experienced phone company in the consortium. Among the blue chip stocks, Petrobras (SAO:PETR4) preferred closed off 2.68 percent at 255 reais while Eletrobras (SAO:ELET6) ended off 1.36 percent at 36.99 reais. Iron ore miner Cia Vale do Rio Doce (SAO:VALE5) closed off 3.96 percent at 24 reais. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (6206)	7/31/1998 5:13:00 PM
From: Steve Fancy	Read Replies (4) \| Respond to of 22640

Closing figures for Telebras Subsidiaries on the Bovespa for: 07/31/1998 Company Type Symbol OPEN HIGH LOW CLOSE CHG TRADES $ VOLUME ======= ==== ====== ===== ===== ===== ===== ===== ====== ============ TELEBAHIA ON * TEBA3 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBAHIA PNA* TEBA5 53.50 53.50 52.01 53.48 - 1.87% 4 150,000 TELEBAHIA PNB* TEBA6 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBAHIA CL ON * TBAC3 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBAHIA CL PNC* TBAC7 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBAHIA CL PNB* TBAC6 26.00 26.00 25.50 25.50 - 5.55% 7 1,420,000 TELEBRAS PN * TELB4 146.00 146.00 139.50 140.70 - 2.62% 1022 2,945,300,000 TELEBRAS ON * TELB3 107.50 107.50 101.61 103.00 - 2.36% 269 228,500,000 TELEBRASI CL ON * TBRC3 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBRASI CL PNB* TBRC6 93.00 93.00 80.00 80.00 -11.10% 5 360,000 TELEBRASILIA ON * TBRS3 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBRASILIA PN * TBRS4 220.01 221.01 220.01 221.01 - 1.77% 2 30,000 TELEMIG PNB* TMGR6 74.00 81.00 73.00 77.00 + 3.21% 105 35,470,000 TELEMIG PND* TMGR8 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEMIG ON * TMGR3 51.99 51.99 48.01 48.01 + 4.32% 2 50,000 TELEMIG CL PNC* TMGC7 54.00 55.08 51.99 55.08 + 1.06% 57 24,690,000 TELEMIG CL PNB* TMGC6 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEMIG CL PNE* TMGC11 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEMIG CL ON * TMGC3 32.00 33.00 32.00 32.01 + 2.89% 12 1,930,000 TELEPAR ON * TEPR3 275.00 276.00 271.00 272.60 + 0.22% 19 373,000 TELEPAR PN * TEPR4 415.00 440.00 415.00 420.00 - 1.17% 97 5,576,000 TELEPAR CL PNB* TPRC6 155.00 170.00 155.00 168.00 + 9.09% 98 19,107,000 TELEPAR CL ON * TPRC3 120.00 127.99 109.00 113.90 - 5.08% 15 304,000 TELERJ PN * TERJ4 82.00 83.00 78.00 81.90 + 2.37% 435 159,470,000 TELERJ ON * TERJ3 48.00 49.50 47.99 49.50 + 1.02% 18 5,250,000 TELERJ CL ON * TRJC3 48.00 48.00 47.00 48.00 + 2.12% 68 62,370,000 TELERJ CL PNB* TRJC6 75.00 75.70 74.00 74.00 - 1.33% 258 144,210,000 TELESP PN * TLSP4 301.00 301.00 288.00 288.01 - 4.31% 282 91,410,000 TELESP ON * TLSP3 200.00 202.00 200.00 201.50 - 0.24% 43 10,030,000 TELESP CL ON * TSPC3 71.99 73.00 71.00 72.50 + 1.39% 120 92,950,000 TELESP CL PNB* TSPC6 125.00 125.00 119.00 119.50 - 4.40% 446 168,000,000 TELEBRAS PN * TELB4T 147.29 147.30 144.04 144.05 0.00% 7 1,707,000 TELEBRAS ON * TELB3T 106.47 106.47 106.43 106.44 0.00% 3 1,300,000 TELEPAR CL PNB* TPRC6T 166.78 169.29 166.78 169.29 0.00% 4 300,000 TELESP PN * TLSP4T 302.09 302.09 292.95 292.95 0.00% 4 600,000 TELEBRAS PN * TELB4T 148.27 148.28 148.27 148.28 0.00% 2 241,003 TELEBRAS PN * TELBH12 0.15 0.15 0.08 0.08 -46.66% 18 65,500,000 TELEBRAS PN * TELBH13 16.50 16.60 11.80 12.00 -24.52% 184 895,000,000 TELEBRAS PN * TELBH33 54.50 54.50 50.00 50.00 - 9.90% 2 200,000 TELEBRAS PN * TELBH34 36.50 36.50 36.00 36.00 + 1.40% 2 4,000,000 TELEBRAS PN * TELBH35 25.50 26.00 22.20 22.20 -12.94% 10 417,000,000 TELEBRAS PN * TELBH36 44.70 44.70 44.70 44.70 - 1.93% 1 90,000,000 TELEBRAS PN * TELBH39 65.70 65.70 65.70 65.70 + 7.17% 1 1,000,000 TELEBRAS PN * TELBH6 8.10 8.30 4.90 5.10 -38.55% 1582 3,891,900,000 TELEBRAS PN * TELBH8 2.60 2.80 1.30 1.40 -48.14% 2294 5,488,300,000 TELEBRAS PN * TELBH10 0.75 0.80 0.30 0.30 -57.14% 256 1,015,000,000 TELEBRAS PN * TELBJ26 16.50 16.50 16.50 16.50 +65.00% 1 100,000 TELEBRAS PN * TELBT10 2.50 2.50 2.50 2.50 -30.55% 1 40,000,000 TELEBAHIA PNB* TEBA6F 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBAHIA PNA* TEBA5F 53.50 53.50 53.50 53.50 / 0.00% 1 7,334 TELEBAHIA ON * TEBA3F 31.02 31.02 31.00 31.00 / 0.00% 6 15,183 TELEBAHIA CL ON * TBAC3F 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBAHIA CL PNB* TBAC6F 25.00 25.00 23.50 23.50 / 0.00% 2 16,768 TELEBRAS ON * TELB3F 105.50 106.00 100.00 103.00 / 0.00% 166 3,910,307 TELEBRAS PN * TELB4F 145.00 145.02 139.00 140.50 / 0.00% 180 3,763,606 TELEBRASI CL ON * TBRC3F 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEBRASI CL PNB* TBRC6F 78.00 78.00 75.00 76.00 / 0.00% 6 10,655 TELEBRASILIA PN * TBRS4F 227.00 230.00 220.00 220.02 / 0.00% 4 12,978 TELEBRASILIA ON * TBRS3F 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEMIG ON * TMGR3F 45.90 47.66 42.00 47.66 / 0.00% 5 9,815 TELEMIG PND* TMGR8F 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEMIG PNB* TMGR6F 73.30 80.00 73.00 77.21 / 0.00% 12 35,175 TELEMIG PNA* TMGR5F 55.00 55.00 55.00 55.00 / 0.00% 1 1 TELEMIG CL PNB* TMGC6F 0.00 0.00 0.00 0.00 / 0.00% 0 0 TELEMIG CL PNC* TMGC7F 51.00 54.00 50.00 54.00 / 0.00% 9 28,724 TELEMIG CL ON * TMGC3F 30.99 31.00 30.00 30.00 / 0.00% 9 10,152 TELEPAR PN * TEPR4F 410.00 450.00 410.00 410.02 / 0.00% 13 4,026 TELEPAR ON * TEPR3F 250.00 277.00 250.00 250.11 / 0.00% 8 2,157 TELEPAR CL ON * TPRC3F 110.01 110.01 108.22 108.22 / 0.00% 5 1,818 TELEPAR CL PNB* TPRC6F 162.00 166.00 160.00 160.17 / 0.00% 14 6,175 TELERJ PN * TERJ4F 76.51 82.50 76.51 81.00 / 0.00% 26 72,872 TELERJ ON * TERJ3F 47.69 48.70 46.02 48.70 / 0.00% 9 22,061 TELERJ CL ON * TRJC3F 45.00 47.00 45.00 47.00 / 0.00% 4 3,851 TELERJ CL PNB* TRJC6F 72.01 75.50 72.01 74.00 / 0.00% 21 83,986 TELESP PN * TLSP4F 293.00 295.50 288.01 292.00 / 0.00% 58 209,537 TELESP ON * TLSP3F 201.00 202.00 198.01 200.02 / 0.00% 26 86,914 TELESP CL ON * TSPC3F 70.00 72.90 70.00 71.50 / 0.00% 28 93,772 TELESP CL PNB* TSPC6F 123.51 124.00 120.00 121.00 / 0.00% 52 188,566