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

To: Steve Fancy who wrote (7344)	9/1/1998 10:20:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares close up 6.87 pct on Wall St rebound Reuters, Tuesday, September 01, 1998 at 17:50 SAO PAULO, Sept 1 (Reuters) - Brazilian shares surged on Tuesday to close the day up 6.87 percent as investors snapped up stocks at two-year lows, fueled by optimism over big gains in Wall Street. "The big jump was due in part to the good performance in the exterior and of course because of the low prices here," a trader at Banco Fator said. Sao Paulo's key Bovespa index of the 58 most-traded shares jumped 456 points to close at 6,917 points. Liquid shares that had suffered big drops -- some in excess of 50 percent -- in August led the market's recovery. Energy company Eletrobras (SAO:ELET6) preferred surged 16.61 percent to close at 20.99 reais. Oil company Petrobras preferred (SAO:PETR4), the second most-heavily traded share, climbed 10 percent to 132 reais. Electric utility Cemig (SAO:CMIG4) rose 9.05 percent to 23.99 reais. Telebras (SAO:TELB4) preferred, the most liquid stock, also closed up 6.71 percent at 89.1 reais. A surge in U.S. equities calmed investors concerned that Russia's economic turmoil is driving investors out of emerging markets. Wall Street was rising more than 3.5 percent when Brazil's markets closed. "We don't have domestic fundamentals to justify this rise, it is completely tied to the global economy," a trader at a local brokerage said. Still, traders warned that the enthusiasm could be short lived. "This is a movement of recovery within a downward channel," one trader said. Trading also jumped with shares worth 630.44 million reais trading hands, up from average trading volume of less than 600 million in August. Regional telephone company Cia Riograndense de Telecomunicacoes <1CRT_pa.SO> preferred led declining stocks, tumbling 10 percent to 45 reais. Investors are concerned over the fate of the company because its current owner, Spain's Telefonica will be forced to reduce its controlling stake. Telecomunicacoes de Sao Paulo (SAO:TLSP4) also slipped, closing off 2.4 percent at 163 reais. Among other blue chips, iron ore miner Cia Vale do Rio Doce (SAO:VALE5) preferred closed up 4.49 percent at 16.3 reais. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7344)	9/1/1998 10:22:00 PM
From: Steve Fancy	Respond to of 22640

Brazil sells extra dlr-indexed notes at 14.09 pct Reuters, Tuesday, September 01, 1998 at 17:50 SAO PAULO, Sept 1 (Reuters) - Brazil's Central Bank on Tuesday sold 500 million reais of special dollar-indexed notes in another move seen by dealers as a bid to calm the forex market amid global financial woes. The Central Bank said it sold the 24-month notes, known as NBC-Es, with a maximum annual yield of 14.09 percent plus the variation of the exchange rate in the period. The bank generally sells this type of debt at regular auctions on Thursdays, but it sold extra batches in the last couple of days to soothe nervous market players, forex dealers said. Since August 21, the Central Bank has sold 4.5 billion reais in NBC-Es. In the same period, 2.15 billion reais in old NBC-Es expired, dealers said. The sales were seen by the market as an attempt by the Central Bank to increase the supply of dollar-indexed paper in circulation amid fears of currency devaluations in some emerging market countries. The Central Bank last week allowed money raised through agricultural loans known as "63 Caipira" to be invested 100 percent in dollar-indexed notes to attract foreign capital. The bank needed to increase the supply of dollar-indexed notes in the market to complement this measure. The debt sold on Tuesday will come due on Sept 4, 1999. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7344)	9/1/1998 10:24:00 PM
From: Steve Fancy	Respond to of 22640

Brazil debt squeezed by rate hike/currency risks Reuters, Tuesday, September 01, 1998 at 18:43 By Hugh Bronstein NEW YORK, Sept 1 (Reuters) - Amid dramatic losses in foreign reserves and a growing fiscal deficit, Brazil debt markets should feel a dangerous squeeze in the weeks before national elections, U.S. analysts said on Tuesday. "It is so precarious that I can't recommend holding on to Brazil's bonds until after the October 4 vote," said Siobhan Manning, Latin American analyst at PaineWebber. President Fernando Henrique Cardoso does not want to alienate voters before the election by increasing interest rates to support the currency, but his hand may be forced if Brazil's foreign exchange reserves keep flying away. The government lost about $12 billion in foreign exchange reserves in August, bringing total reserves down to about $63.5 billion, analysts said. The managed float of the Brazilian currency, the real, requires the central bank to support its currency by buying reais and selling foreign currencies, thus running down its reserves. Another way to support the real would be to raise interest rates to make the Brazilian currency more attractive to foreign investors. But a rate hike would increase the government's own borrowing costs, raising the country's fiscal deficit, which is already at 7 percent of gross domestic product (GDP), analysts said. "They're praying that reserves hold up above $50 billion over the next four weeks and then Cardoso, who is expected to win reelection, will have to announce a credible fiscal package, which will include spending cuts," said PaineWebber's Manning. A key problem is that about 60 percent of the country's federal government debt is in floating-rate bonds, which means it would be more costly to repay if the central bank raised the general level of market interest rates in Brazil. Consequently, the fiscal impact of an interest rate hike would be felt much sooner than was the case the last time there was a rate hike in October of 1997, because most domestic debt at that time was in fixed-rate instruments, analysts said. "If they increase interest rates now, they're going to blow out their debt service costs, which will increase their fiscal deficit to about 9 percent of GDP," Manning said. On Wednesday, the board of Brazil's central bank will hold its last scheduled rate-setting meeting before the election. "I expect them to cut the benchmark central bank rate by 50 to 75 basis points, to no lower than 19 percent, and then try to maintain the overnight SELIC rate at around those levels," said Felipe Garcia, a Latin American economist at I.D.E.A., an economic research firm that provides data to commercial and central banks. Marilyn Skiles, co-head of Latin American research at Chase Securities, said severe reserve depletion may force the central bank to hold a special meeting to raise interest rates before the election. But even that, she said, should not seriously threaten the incumbent's chances over his left wing opponent Luiz Inacio Lula da Silva. "They're obviously worried about it, but I don't think it would undo the big lead that Cardoso has in the polls," Skiles said. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7344)	9/1/1998 10:26:00 PM
From: Steve Fancy	Respond to of 22640

Latam ministers to meet at IMF on Russia spillover Reuters, Tuesday, September 01, 1998 at 19:42 By Anthony Boadle WASHINGTON, Sept 1 (Reuters) - Latin American finance chiefs will meet at the International Monetary Fund on Thursday to try to stem damage from the latest world financial storm, though investors say there is little they can do but pray. IMF managing director Michel Camdessus called the two-day "regional surveillance" meeting to exchange views on policies to stop contagion from the Russian crisis, which has battered stock markets in the region and put pressure on currencies. Camdessus said the meeting would be an opportunity to show that the international community was still prepared to back reform programs even if financial aid was needed. Analysts say the IMF failed to do anything to avert crises in Asia and Russia and wants to be seen actively looking after the one region where its reform policies have borne fruit, while dispelling concern that the fund has run out of money. "Aside from praying together, the finance ministers can't do a lot to avert the world financial crisis that is building up," said Jorge Mariscal, chief strategist for Latin America at Goldman Sachs. "The IMF's attention should not be on Latin America...it should be focused on Russia and on Japan," he said. "Rather than have an IMF meeting with Latin America, this should be a high-level meeting with G7 countries." Finance ministers and central bank governors from Brazil, Argentina, Chile and Venezuela have confirmed they will attend the meetings in Washington on Thursday and Friday. Senior U.S. and Canadian finance officials are also expected to take part in the talks with Camdessus. The emerging market rout set off by the rouble crisis hurt Latin American stocks and increased spreads on regional debt. Markets have been concerned with Brazil's large fiscal deficit and the growing fiscal shortfall in Venezuela, whose public finances have been badly hit by the fall in oil prices. Some investors feared a devaluation of Venezuela's bolivar could touch off the same domino-effect of currency crises seen in Asia last year. But economists dismiss such fears as "hysteria" and blame recent financial turmoil in Latin America on international fund managers having to cover their short positions in other markets where they are taking a beating. "There are some yellow flags in some Latin economies, but none are in the red zone of emergency and generally steps are being taken to deal with them," said Jeff Schott, a senior fellow at the Institute for International Economics, a Washington-based economics think tank. If Latin America had not gone through the Mexican peso crisis of 1995, which prompted measures to shore up the region's financial sectors, there would be real cause for concern today, Schott said. Thanks to those reforms, Latin America is in a stronger position to face the current global volatility, over which neither the Latin Americans nor the IMF have any real control, he said. "Clearly developments in world markets are out of the control of all the players who will be at the table in Washington," Schott said. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7344)	9/1/1998 10:33:00 PM
From: Steve Fancy	Respond to of 22640

Emerging mkt debt rebounds,investors stay cautious Reuters, Tuesday, September 01, 1998 at 21:02 By Apu Sikri NEW YORK, Sept 1 (Reuters) - Emerging market bonds staged a strong comeback Thursday but traders warned that investor sentiment remains skittish. Emerging market bonds piggy-backed on a recovery in the Dow Jones Industrial Average late in the day after showing some signs of strength early Tuesday, traders said. Technical factors have also helped emerging market debt prices, traders said. Many market players had taken short positions in the more liquid emerging market securities, such as Brazil "C" <BRAZILC=RR> bonds, to hedge the less liquid bonds, such as those issued by Rusisa. As these hedges have been unwound, dealers and investors have closed those short positions, allowing prices to recover, traders said. Brazil C securities ended Tuesday at 58-1/8, gaining 7-1/8 on the day. Overall, trading volume remained low, dealers said. Despite the strong recovery in the DJIA after a drop of more than 500 points on Monday, economies in many parts of the world remained under siege, analysts said. Meanwhile, Brazil has seen foreign currency reserves drop nearly $10 billion as investors worry about the country's large fiscal deficit and huge domestic debt, analysts said. More than 50 percent of Brazil's domestic debt of about 290 billion reais is in floating-rate securities. This "curtails the government's ability to use monetary policy to avoid an attack" on the currency by raising interest rates, said Raul Elizalde, fixed-income debt strategist at Banco Santander. "Brazil is vulnerable to the international environment" and "is ill-equipped to deal with severe, heavy turmoil," he said. Despite the expenditure of reserves of the last month, Brazil retains a huge foreign exchange reserves arsenal of nearly $70 billion. But analysts warned those reserves would not go far in the event of a major attack on the currency or large-scale capital outflow. Meanwhile, in Russia, the government of acting Prime Minister Viktor Chernomyrdin quietly abandoned its landmark currency policy on Tuesday, letting the beleaguered rouble slip out of the band. The central bank set its official rate for Wednesday at 10.9 roubles to the dollar, well outside the upper band of a trading corridor previously set by the government. The rapid devaluation of the rouble has prompted international investors to balk at the proposed restructuring of a large chunk of outstanding GKOs. With Moscow offering coupons in the 20-percent to 30-percent range on bonds, investors said their return on the new securities would be negligible, given that the rouble has already effectively lost more than 40 percent of its value against the dollar. Russia's benchmark PRINs <RUSPRIN=RR> gained two points to close at 11-3/4. Russian Prime Minister Chernomyrdin indicated Tuesday that he would be open to discussing revised terms on the debt restructuring, which some investors have dubbed as a sell-out of their interests. One investor suggested that one of the proposals being floated in discussions is a whole-new restructuring package that would give holders of GKOs a 15-year Eurobond. But it is unclear whether such an alternative would be any more pallable to investors given increasing doubts about Russia's ability to service its dollar-denominated external debt. Some investors are attempting to coordinate an effort by investors to get better value for their dollar. Steven Halliwell, president of River Capital International LLP, a money management firm in New York specializing in investments in Russia, sent out a letter to about 100 fund managers, urging them to put pressure on the U.S. government to negotiate a better deal for investors. "The terms of the restructuring amount to effective confiscation of our assets," said the letter, a copy of which was obtained by Reuters. "We strongly urge that the terms of the restructuring be renegotiated, and believe that strong support from the U.S. government is essential at this time," it said. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7344)	9/1/1998 10:34:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Telesp confirms Xavier as board president Reuters, Tuesday, September 01, 1998 at 21:35 SAO PAULO, Sept 1 (Reuters) - Shareholders of Brazil's fixed-line phone company Telesp (SAO:TLSP4) on Tuesday ratified Fernando Xavier Ferreira, the former head of recently privatized Telebras (SAO:TELB4), as its president. Xavier, once the president of Brazil's telephone monopoly will now be the president of the board of the biggest phone company carved out of Telebras for the privatization auction, said the firm's new owners, Spain's Telefonica (MADRID:TEF). "Fernando Xavier Ferreira, one of the principal innovators of the privatization of Telebras will be Telefonica's highest executive in Brazil," Telefonica said in a statement. Telefonica bought Telesp Participacoes, the holding company that groups fixed-line companies Telesp and CTBC serving Sao Paulo state, during the July 29 sale of the 12 Telebras units. Shareholders also on Tuesday elected Manuel Garcia Garcia, former executive director of Telefonica's operations in Peru, as vice-president of Telesp. Local media reports had predicted Garcia would be named president. Garcia was also named president of CTBC. "With these nominations, Telefonica, as majority shareholder and administrator of Telesp, begins to take the first steps toward a new organization oriented toward the clients in this competitive market," Telefonica said. Xavier was also elected last month as president of the board of directors of Telerj Celular, the cellular phone firm serving Rio de Janeiro. Tele Sudeste Celular Participacoes, the holding firm grouping the cellular phone operations in Rio de Janeiro and Espirito Santo states, was also bought by a consortium led by Telefonica. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7344)	9/1/1998 10:35:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Telesp confirms Xavier as board president Reuters, Tuesday, September 01, 1998 at 21:35 SAO PAULO, Sept 1 (Reuters) - Shareholders of Brazil's fixed-line phone company Telesp (SAO:TLSP4) on Tuesday ratified Fernando Xavier Ferreira, the former head of recently privatized Telebras (SAO:TELB4), as its president. Xavier, once the president of Brazil's telephone monopoly will now be the president of the board of the biggest phone company carved out of Telebras for the privatization auction, said the firm's new owners, Spain's Telefonica (MADRID:TEF). "Fernando Xavier Ferreira, one of the principal innovators of the privatization of Telebras will be Telefonica's highest executive in Brazil," Telefonica said in a statement. Telefonica bought Telesp Participacoes, the holding company that groups fixed-line companies Telesp and CTBC serving Sao Paulo state, during the July 29 sale of the 12 Telebras units. Shareholders also on Tuesday elected Manuel Garcia Garcia, former executive director of Telefonica's operations in Peru, as vice-president of Telesp. Local media reports had predicted Garcia would be named president. Garcia was also named president of CTBC. "With these nominations, Telefonica, as majority shareholder and administrator of Telesp, begins to take the first steps toward a new organization oriented toward the clients in this competitive market," Telefonica said. Xavier was also elected last month as president of the board of directors of Telerj Celular, the cellular phone firm serving Rio de Janeiro. Tele Sudeste Celular Participacoes, the holding firm grouping the cellular phone operations in Rio de Janeiro and Espirito Santo states, was also bought by a consortium led by Telefonica. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7344)	9/1/1998 10:38:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

**!!Brazil's Telebras spinoffs to go public on Sept 15 Reuters, Tuesday, September 01, 1998 at 22:16 BRASILIA, Sept 1 (Reuters) - The 12 companies spun off from Telebras for its July 29 privatization will begin trading simultaneously in Brazil and the United States on September 15, Brazil's Communications Minister said on Tuesday. "The forecast is that the stocks will be listed on the bourses on September 15," said Communications Minister Luiz Carlos Mendonca de Barros. Telebras (SAO:TELB4) stock will be replaced in a one-for-12 swap by shares in the 12 telephone holding companies that were sold to investors for $19 billion. Mendonca de Barros said he wasn't concerned about the recent drop in Telebras' share price as it accompanied the plunge in Brazil's stock index. "When the shares are in the bourses, the market will begin to evaluate the 12 companies separately," he said. Investors will have the choice of trading in their Telebras shares or American Depositary Receipts (NYSE:TBR) for stock in the new companies or for receipts that bundle the 12 units. Telebras preferred shares have tumbled 34.7 percent since the privatization auction to 89.10 reais while ADR's have plunged more than 36 percent. Copyright 1998, Reuters News Service