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

To: Oracle who wrote (6592)	8/13/1998 12:28:00 AM
From: Steve Fancy	Respond to of 22640

Emerging mkt debt sinks with Russia's albatross Reuters, Wednesday, August 12, 1998 at 20:39 By Apu Sikri NEW YORK, Aug 12 (Reuters) - The albatross of Russia's financial problems sank its dollar debt by six points on Wednesday to price levels not seen since the republic began issuing foreign debt and dragged the entire emerging market sector down with it. Russia's benchmark PRINs <PRINRUS=RR> declined to 26 late in the day after trading as high as 32 in early morning trade, dealers said. Market sentiment turned negative after Russia's central bank announced that it would put a limit on the amount of dollars local banks can purchase in the interbank market. That statement was read by market participants as putting controls on the free flow of currency and the first clear signal that the rouble is coming under pressure. "Who knows what that limit means? Effectively, it is partial control on free capital flows and limits free convertibility," said Paul Masco, head of emerging markets debt trading at Salomon Smith Barney. "All eyes are on the Moscow open tommorow to see where the rouble trades." Traders point out that Moscow has said it won't spend more than $200 million a day to defend the rouble. If there is an attack on the currency, that set amount wouldn't go very far, traders said. Moreover, the Duma, Russia's lower house of Parliament, canceled an emergency session that was scheduled for late August. "There is this sense that there are severe problems in Russia, that nobody there is paying attention," said a trader. Russia's problems pulled down prices on emerging market debt across the board. Brazil "C" <BRAZILC=RR> bonds, a key barometer of market sentiment, were lower by 2-1/2 points to close at 64-3/4. Mexico's UMS bonds due 2026 closed at 102-3/4, lower by 2-3/8 on the day. Despite the decline, there was good liquidity in the sector with traders providing two-way flow, according to dealers. Mexico's peso has come under pressure over the last few days as market players shy away from any currency that's seen as even slightly overvalued. Emerging market investors say it's important that Russia's problem be isolated, dealt with quickly by its government, and other Group of Seven countries to avoid a further rout in emerging market debt. About $40 billion in new bonds have been sold by emerging market issuers this year without attracting a wider base of investors. Tuesday was the only day in the last eight trading sessions that saw emerging market debt prices close higher. Those gains were quickly eroded on Wednesday as money managers viewed the developments in Russia as a deepening of its financial crisis. Bankers are hoping that some sort of new injection of funds will be worked out between G-7 countries before President Bill Clinton's visit to Moscow in early September. "Russia should be the ward of official creditors, not market creditors," said Michael Rosborough, portfolio manager at the Pacific Investment Management Co. (PIMCO). Bankers said they believe there are discussions between the U.S. Federal Reserve, the State Department, the U.S. Treasury, the International Monetary Fund, the Bundesbank and other agencies on the possible need of another injection of funds into Russia. The IMF package announced last month was at $22.6 billion. Investors said they don't see how Russia can pay out on $20 billion of short-term Treasury bills coming due this year with market yields in the 140-percent range. apu.sikri@reuters.com )) Copyright 1998, Reuters News Service

To: Oracle who wrote (6592)	8/13/1998 12:33:00 AM
From: Steve Fancy	Respond to of 22640

Brazil "comfortable" despite markets Reuters, Wednesday, August 12, 1998 at 20:41 At the end of June, Brazil's net foreign currency reserves stood at $70.06 billion, down from $71.95 billion, according to statement from the Central Bank in July. Pinho Neto said a slump in Brazil's C-bond, the most liquid of all emerging market assets and which is sensitive to swings in market, was not a realistic reflection of the Brazilian economy and that current spreads on the paper were "absurd." Asked about dollar flows in the coming weeks, Pinho Neto said about $2.5 billion of high-yielding dollar-indexed securities, known as the "rural 63s" were due to expire by the end of August. Still, revenues from the recent privatization of the Telebras telecommunications system, plus the takeover of two local banks by foreign buyers, would more than offset those outflows, while foreign direct investment levels in general remained high, he said. william.schomberg@reuters.com) Copyright 1998, Reuters News Service