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

To: CuttotheCore who wrote (7424)	9/3/1998 2:07:00 PM
From: Steve Fancy	Respond to of 22640

Latam economies very important for U.S. -- Rubin Reuters, Thursday, September 03, 1998 at 13:48 WASHINGTON, Sept 3 (Reuters) - U.S. Treasury Secretary Robert Rubin said on Thursday that world financial turmoil has had some spillover effect on Latin America, and that developments in the region were "profoundly important" to the United States. "We have felt from the very beginning that since the problems of Mexico in 1995, that what happens in Latin America is profoundly important for the United States," Rubin said on the sidelines of a meeting of Latin American financial officials being held at the International Monetary Fund. "For that reason, we have been extremely supportive of the activities and programs in Latin America that deal with the issue," he said. Rubin said many Latin American countries were equipped to deal with the world financial situation. "It obviously has had some effect on Latin America. On the other hand, many Latin American countries have done a great deal over the last few years (to reform their economies)," he said. "The issue here is that you have a host of nations in Latin America that have been very forward looking in terms of economic policy and reform. They have accomplished a great deal. We in the United States have to continue focusing on maintaining solid growth here," he added. Rubin said it was unlikely that the meeting at the IMF would come up with specific proposals to soothe financial troubles in Latin America. "This meeting is not designed to come out with a specific proposal of any sort. It was designed to get a group of important countries together in Latin America to discuss the actions that they were taking and give them an opportunity to discuss with each other what is happening," he said. He said that the meeting came in the context of ongoing coordination between U.S. and Latin American financial authorities. "We work with these countries all the time. This is really just another instance of what has been an ongoing process since the Mexican support program," he said, referring to the 1995 peso crisis. Rubin's efforts to downplay the results that might come from the meeting were echoed by Chilean Finance Minister Eduardo Aninat, who said, "I do not expect any special policies to come from individual countries at this meeting, because it is inappropriate to do that here and now." 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: CuttotheCore who wrote (7424)	9/3/1998 2:18:00 PM
From: Steve Fancy	Respond to of 22640

Colombia devaluation helps sour Brady bond mood Reuters, Thursday, September 03, 1998 at 14:04 By Hugh Bronstein NEW YORK, Sept 3 (Reuters) - The devaluation Wednesday of the Colombian peso contributed to losses in the prices of Brady debt of neighboring Venezuela and Ecuador as fear spread that those countries may devalue as well, traders and analysts said. But while the three countries have similar exchange rate policies and devaluations are expected in both Venezuela and Ecuador before the end of the year, experts said Colombia's move to effectively devalue the peso by 9 percent does not point to imminent devaluations. "It's psychological," said Richard Casey, emerging markets strategist at Donaldson, Lufkin & Jenrette. "Emerging markets are in turmoil and any devaluation causes more nervousness after what happened in Russia." Casey was referring to Moscow's recent devaluation and debt default that roiled financial markets around the globe. The Brady debt of Ecuador and Venezuela has been among the hardest hit, due to their shaky economic fundamentals. Venezuela is considered especially vulnerable to the Colombian devaluation due to a bi-lateral trade flow equaling about 10 percent of total trade of the two countries. Venezuela also is beleaguered by troubling internal factors, such as the possibility of Hugo Chavez, the leader of a bloody 1992 coup attempt, winning December's presidential election. Rumors of a devaluation of the Venezuelan bolivar have circulated for months. But analysts said Caracas wants to avoid such a move because the inflation that would follow a devaluation would likely result in more protest votes for populist Chavez. "In Venezuela, they're probably past due for an adjustment of the currency band to allow for a more rapid depreciation of the exchange rate, but they are holding off for political reasons," Casey said. "If they can buy time and get through the election without devaluing, that's their plan," he added. "Venezuela's (currency) reserves are now about $13.8 billion. They have to drop another $2.0 or $3.0 billion before they start thinking seriously about a devaluation." The bolivar trades in a band 7.5 percent above and below a central parity rate that slides down monthly by 1.28 percent. Ecuador is seen as weak due in large part to a current account deficit of over 7 percent of gross domestic product, caused by low prices in key exports such as oil, bananas and shrimp. Prices of Brady bonds, restructured emerging market debt guaranteed by the U.S. Treasury, went down across the board Thursday. Benchmark Brazil C bonds <BRAZILC=RR> were down 5/8 to bid 54-7/8 at midday Thursday while Ecuador's PAR bonds <ECUPARS=RR> were down 1/4 to bid 41 and Venezuela's PAR bonds <VENPAR=RR> were down 2-1/4 to bid 57-1/2. "Venezuela is underperforming but not because of Colombia," one emerging debt trader said. "The Colombian devaluation is just another source of pressure, but the whole Brady market is under pressure today because it is anticipating another sell-off in U.S. equities." The Dow Jones Industrial Average was down 1.40 percent or 108 points Thursday afternoon. Another emerging debt trader said negative sentiment associated with Colombia's devaluation is misplaced. "With the pressure that had been on the Colombian peso, this was probably the right move by the Colombian Central Bank," the trader said. "But nobody buys on a devaluation in this environment." Colombian debt, one of the few investment-grade sovereign bond assets in Latin America, is traded on the Eurobond market. Colombia's Eurobonds traded down five points to a bid of 70 on news of the devaluation, traders said. Meanwhile, investors worry that Brazil, Latin America's largest economy, will continue seeing capital outflows as the fear of domino-like devaluations exacerbates the emerging markets crisis. Brazil's reserves were at about $62.5 billion at the end of August and lost more than $2.0 billion in the last two days alone, one Latin American debt analyst said. Copyright 1998, Reuters News Service

To: CuttotheCore who wrote (7424)	9/3/1998 2:25:00 PM
From: Steve Fancy	Respond to of 22640

Fitch IBCA comments on Brazil, Venezuela ratings Reuters, Thursday, September 03, 1998 at 13:42 (Press release provided by Fitch IBCA). NEW YORK, Sept 3 - In a comment issued today Fitch IBCA, the international rating agency, said that the immediate rating implications for Brazil and Venezuela of recent financial market turbulence were limited. Nevertheless, it highlighted the greater credit vulnerabilities of the two weakest Latin American countries, rated by Fitch IBCA, reflected in the existing ratings of Brazil at B-plus and Venezuela a notch higher at BB-minus. Moreover, the agency warned, the rating outlook depended on the policies to be pursued after forthcoming elections in October and December respectively. Brazil's suffered an intense speculative attack last October due to its combination of high indebtness, low liquidity and weak macroeconomic fundamentals. It is once again the target of speculation in the wake of the Russian crisis. Venezuela's difficulties are more recent. Lower oil revenues have opened up a budget deficit of approaching 5 percent of gdp. Copyright 1998, Reuters News Service

To: CuttotheCore who wrote (7424)	9/3/1998 2:31:00 PM
From: Steve Fancy	Read Replies (3) \| Respond to of 22640

U.S.'s Rubin: LatAm Countries Have Done A "Great Deal" Dow Jones Newswires WASHINGTON -- Latin America has made "great progress" on its structural reforms, U.S. Treasury Secretary Robert Rubin said Thursday. The region is "profoundly important" to the U.S. economy, he added. "We have felt from the very beginning with the problems in Mexico in 1995 that what happens in Latin America is profoundly important to the U.S. For that reason, we have been very supportive of the programs and activities in Latin America. We continue to feel that way," Rubin told reporters before entering a meeting between International Monetary Fund officials and economic policy makers from nine Latin American countries. Those meetings, which began Thursday, are slated to run through Friday. When asked about the possibility of a U.S. or IMF-led contingency package for Latin America, Rubin said "I don't think that's the issue here. I think the issue here is that we have a host of countries in Latin America that have been very forward looking in terms of economic policy and reforms and have accomplished a great deal. I think the key is that these countries continue to focus on their issues, and we in the U.S. need to continue focusing on maintaining solid growth here." Rubin said the meeting is "just one more piece of what has been an ongoing process of our countries working together." Rubin said he will discuss with Japan's Finance Minister Kiichi Miyazawa the U.S. economy and measures that the Japanese government is taking to "get back on track with domestic, demand-led growth, which is important not only for Japan but for the rest of the world." "Japan is key, in my judgment, and is central to economic well-being in the world," he said. Rubin is to meet with the Japanese finance minister Friday in San Francisco.