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

To: Jerry A. Laska who wrote (6259)	8/3/1998 8:32:00 PM
From: Jerry A. Laska	Respond to of 22640

Post-Telebras, Brazil privatizations keep coming By Fatima Cristina SAO PAULO, Aug 3 (Reuters) - Telebras (TELB4.SA) was the jewel in the crown, but analysts say Brazil's public sector still has plenty of juicy privatization opportunities for the picking. State companies ranging from power firms to sewage utilities are slated to go on the auction block before the end of 1999, though the country's frantic selling spree is set to take a breather ahead of general elections in October. ''Telebras was the biggest individual privatization, but there are still a host of attractive public sector assets up for sale,'' said Rodrigo Fiaes, head of research at Banco Icatu. The Brazilian government last week sold its controlling stake in the 12 operating subsidiaries of telphone company Telebras for $19 billion, 63 percent over the combined asking price. The telecommunications sell-off, however, is not over. A further $5.0 billion is expected to be raised when the government auctions concessions for companies to compete against the three privatized wireline companies and against Embratel, the former Telebras long-distance and international carrier. The ''mirror companies'' are seen drawing huge foreign interest, particularly from operators, some of whom may have lost out at last Wednesday's massive auction of Telebras. Before the sale of Telebras' licenses, the next big privatization is set to be power generator Gerasul (GRSU3.SA), slated for September 1. Gerasul is one of federal power holding Eletrobras' (ELET6.SA) four generating units earmarked for sale. All the Brazilian power generating assets together nearly add up to value of Telebras, power sector analysts said. The Gerasul sale is likely to be followed by the generating units of Sao Paulo state power utility Cesp (CESP4.SA), expected for later this year. A slew of smaller, state-level electricity distributors is due to be transferred to private hands in coming months, including Cia Energetica de Alagoas (Ceal) and Cia Energetica de Pernambuco (Celpe) in Brazil's Northeast. In the financial sector, Minas Gerais state bank BEMGE (BEMG3.SA) is expected to go on the auction block later this month, while Sao Paulo state's Banespa (BESP4.SA), Brazil's largest state bank, should be sold by mid-1999. Analysts say the government may have to slow the pace of privatization ahead of October's elections when Brazilians will vote for a new president, a large chunk of Congress and state governors and representatives. Some of the sales, they said, will probably have to wait until next year when President Fernando Henrique Cardoso is expected to begin his second term. Cardoso, who is running for re-election, is as much as 18 percentage points ahead of his nearest rival, according to recent opinion polls. Under its current sell-off plan, Brazil expects to close the year with over $30 billion in privatization revenues after selling primarily state-level power assets and Telebras. In 1999, it plans to privatize another $20 billion. Since 1991, when the nation's privatization program began, Brazil has raked in $80.6 billion, including the sales proceeds and transfer of debt to private investors, after selling more than 50 companies. That figure is expected to jump to $100 billion by the end of 1999, said Jose Pio Borges, vice president of the National Development Bank (BNDES) charged with coordinating most of the country's privatizations. Analysts also speculate that other big state assets such as Banco do Brasil (BBAS4.SA), Brazil's largest financial institution, and former state-owned oil monopoly Petrobras (PETR4.SA) could one day join the list of companies up for sale. The government would have to wage a political battle to sell Banco do Brasil and Petrobras, both of which are considered symbols of national pride and, unlike the crumbling telephone system, do not hinder the everyday life of most Brazilians. For now, the federal government plans to sell surplus voting shares in Petrobras, maintaining just a 51 percent controlling stake in the company, while Banco do Brasil is due to sell its local and overseas brokerages. biz.yahoo.com

To: Jerry A. Laska who wrote (6259)	8/3/1998 8:33:00 PM
From: Jerry A. Laska	Respond to of 22640

FOCUS-Brazil raises eyebrows with new deficit data By William Schomberg BRASILIA, Aug 3 (Reuters) - Brazil unexpectedly changed the way it presents its public sector budget deficit data Monday, raising eyebrows among economists and forcing the Central Bank to deny it was hiding bad news in the sensitive fiscal accounts. The Central Bank announced that in nominal terms -- including debt costs -- the deficit was equivalent to 6.52 percent of gross domestic product in the January-May period, up from 6.23 percent in January-April and 6.15 percent in January-March. In primary terms -- excluding debt costs -- Brazil posted a budget surplus of 0.84 percent of GDP, down from 1.32 percent in the first four months of the year and from 1.37 percent between January and March. Since December 1996, the Central Bank has measured the public sector budget deficit over 12 months, with the shortfall in the 12 months to April reaching 6.72 percent of GDP. The deficit is currently the most closely watched of all Brazilian economic indicators. Economists consider it the Achilles heel of the country's four-year-old anti-inflation plan because it makes the real currency vulnerable to speculative attack. ''My impression is the government switched back to its old reporting method because the number is more comfortable,'' said Carlos Kawall, chief economist with Citibank in Sao Paulo. He calculated the 12 month deficit to May would have been about seven percent of GDP. The head of the Central Bank's economics department denied any sinister motives behind the new numbers and rubbished suggestions from reporters that the government was trying to cast a less gloomy light on the deficit ahead of October's presidential, congressional and state-level elections. ''This is a technical report which has absolutely nothing to do with the elections,'' Altamir Lopes told a news conference. ''I cannot accept that kind of interpretation.'' A few moments later, a power cut plunged the press room at the Central Bank into darkness, prompting quips from reporters about a lack of transparency in the fiscal accounts. Lopes said the new method was compliant with International Monetary Fund standards and reflected more accurately Brazil's fiscal performance in 1998. The 12-month figures, he said, were ''distorted'' by quirks like a surge of an entire percentage point in the 12-month nominal public sector budget deficit in December from November. Analyzing May's numbers, Lopes attributed a primary shortfall of 721 million reais in the month to payment by state companies of about 1.1 billion reais in dividends and a deficit of roughly 500 million reais in the national social security system. He said a 12-month deficit to May would have shown a deterioration from April, but Lopes declined to comment on whether or not it would have broken the seven percent/GDP barrier. The Central Bank would announce the figure on its Internet homepage (http://www.bcb.gov.br) but probably not until next week, he said. Looking ahead, the official predicted further worsening in the fiscal figures in the coming months. The expected increase in the deficit would be fueled by the loss-making social security system and a lack of one-time tax and other revenue sources which helped the central government post budget surpluses earlier this year. But an expected increase in economic activity should slowly increase tax revenues towards the end of the year and the nominal public sector deficit might close 1998 close to 1997's 6.11 percent of GDP, Lopes said. He also played down suggestions that Brazil's debt levels were growing too quickly. Net public sector debt in May stood at 334.8 billion reais, or 36.9 percent of GDP, up from 328.2 billion reais, or 36.4 percent of GDP, in April and 324.7 billion reais, 36 percent of GDP, in March. Lopes blamed lower GDP rather than the new debt for the nearly one percentage point increase in the ratio since March. ''There is no explosive growth in debt. The important thing is to keep debt-to-GDP-levels more or less stable,'' he said. biz.yahoo.com

To: Jerry A. Laska who wrote (6259)	8/3/1998 8:35:00 PM
From: Jerry A. Laska	Read Replies (1) \| Respond to of 22640

Brazil shrs, telecom stocks hit by global decline SAO PAULO, Aug 3 (Reuters) - Brazilian shares fell 2.75 percent, led by steep declines in telephone companies, amid a general downturn in global equities on concerns over Japan's sluggish economy and weakening currency. ''The market reflected the external scenario, especially the Japanese currency situation,'' said a trader at BancoCidade. ''Telecoms and Petrobras (PETR4.SA) felt the hit the most.'' Sao Paulo's key Bovespa index of the 58 most traded shares closed off at 10,413 amid light volume of 495 million reais ($425 million). Telebras preferred (TELB4.SA) tumbled 3.34 percent to close at 136 reais. Telesp (TLSP4.SA) regional phone company and telecom equipment maker Ericsson (ERIC4.SA) led declining stocks. Telesp closed off 5.86 percent at 112.50 reais, and Ericsson ended off 7.9 percent at 26.80 reais. Among other blue chips, state-controlled oil company Petrobras preferred closed off 3.88 percent at 245.11 reais. Energy holding company Eletrobras preferred (ELET6.SA) ended off 2.68 percent at 36 reais and Cia. Vale do Rio Doce (VALE5.SA) slipped 0.83 percent to close at 23.80 reais. biz.yahoo.com