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

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:13:00 PM
From: Steve Fancy	Respond to of 22640

Finally, a real live short here on our thread. Welcome! Must have been stung a tad the last couple days. Although we may take 'er back down and test the 45-50 range yet, 36 seems pretty far fetched...especially after the split. Shorting at these levels is a dangerous game. Brazil will not devalue, and expect some serious action immediately after the elections (Oct 3) unless Lula wins, in which case all bets are off. Rubin and company have made it pretty clear they don't want to see the situation get any worse. You're up against some of the best. Good luck. sf

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:16:00 PM
From: Steve Fancy	Respond to of 22640

Emerging mkt debt edges up on Clinton's IMF remark Reuters, Monday, September 14, 1998 at 16:42 NEW YORK, Sept 14 (Reuters) - Emerging market bond prices reversed course mid-session Monday after President Bill Clinton signaled the International Monetary Fund and maybe the United States could support Brazil as a last resort, traders said. Emerging market bond prices that were lower by three to four points in early morning trade were slightly higher late Monday although the gains lagged those of the region's stock markets. "Clinton's speech made some impression on the market," said Paul Masco, chief emerging markets debt trader at Salomon Smith Barney Inc. "We have to be ready to respond immediately and with financial force if necessary to the currency crisis if it spreads, especially if it threatens the economies of Latin America," Clinton said in a speech to the Council on Foreign Relations in New York. But many economists, investors and traders said that while international aid might help, it would probably not stave off a crisis unless market sentiment improved. Traders pointed to the failure of rescue missions in Russia and some Asian countries. "I'm not sure what it (an aid package) means anymore," said Masco. Russia received the largest rescue package of any country in recent years, but it was not enough, analysts noted. They said Brazil must restore investor confidence before it can stem the outflow of dollars. "Nobdoy anticipated Brazil losing $20 billion in a month in foreign exchange reserves," said Salomon's Masco. Brazil has raised the basic lending rate to nearly 50 percent and traders said they expected foreign exchange outflows would now be lower than the $1.5 billion daily average of the past two weeks. This is the second time in less than a year that Brazil has lifted short-term rates to nearly 50 percent in a bid to halt a currency crisis. "They did it masterfully last October," said Paul Dickson, strategist at Lehman Brothers Inc. He said he was not sure Brazil could repeat the performance. Analysts noted that higher rates make it more difficult for Brazil to service its mountain of short-term debt, with about 80 billion reais ($70 billion) maturing in the next six weeks. Some said Brazil may even have to restructure domestic debt. Brazil benchmark "C" bonds, <BRAZILC=RR>, closed 5/8 higher at 55-1/8, partly on short-covering by dealers. U.S. investors continued to be net sellers of emerging market debt, traders said, and that was contributing to keeping a lid on bond prices despite a climb in the Dow Jones Industrial Average and a surge in Latin American stock markets on Monday. While Brazil fought tooth and nail to defend the real, Ecuador's central bank on Monday allowed its currency, the sucre, to depreciate sharply against the dollar by weakening the upper and lower limits of the currency's trading band. The Central Bank said the sucre's new lower limit was 6,740 per dollar and the upper limit was 5,833. Ecuador's dollar-denominated discount bonds <ECUDISC=RR> ended slightly higher. The discount bonds were at 44-1/8, up 3/8 on the day. Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:17:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil does not need IMF help now-finance official Reuters, Monday, September 14, 1998 at 16:42 WASHINGTON, Sept 14 (Reuters) - Brazil does not need any assistance from the International Monetary Fund at present and has sufficient international reserves to defend its currency, a top Finance Ministry official said on Monday. "The reserves stand at around $50 billion and are all usable," Amaury Bier, Secretary for Economic Policy at the Brazilian Finance Ministry, told the Brazil-U.S. Business Council. Bier later told a news conference that the Brazilian government was not discussing any restrictions on imports or controls on capital flows. The official said Brazil's response to external financial turbulence was "strictly orthodox" and focused entirely on cutting the country's large fiscal deficit, which he called the "main weakness" of the Brazilian economy. Bier said, however, that lower U.S. interest rates would be good not only for Brazil, but the whole world. "It would be an important contribution to the whole rebalancing of the international economy," he told reporters. "It is something that could be done. There are technical grounds for it, and I hope this will be the move (that the Federal Reserve Board takes)," he added. The Brazilian Finance Minister called for lower U.S. interest rates last week, while President Fernando Henrique Cardoso has called on the Group of Seven leading industrialized nations to act together to calm world markets. Bier said the main component of the current crisis was "irrationality" that had a contagion effect on emerging markets after the Russian default. "We are paying higher spreads than are reasonable given our fundamentals, which have not changed," he said. "Some degree of coordination could help in reducing this to its correct proportions," Bier said. "We don't see the need at this time for financial assistance from the IMF," he said. "What is needed for a country with $50 billion in reserves is to do the right thing." That means tackling the fiscal deficit, the worst problem facing Brazil, he said. Bier said Brazil had made progress but must continue deepening its fiscal measures to ensure future economic growth. Bier said a devaluation was not on the cards and was not needed. The government is depreciating the Brazilian currency, the real, at a rate of 7.4 percent a year, and given 2 percent inflation, that meant there was a significant degree of real devaluation and that policy "will continue." Bier told the Brazil-U.S. Business council that the government had cut 9.25 billion reais from federal spending in 1998 and was determined to continue working towards balancing the primary budget in 1999. He said reform of the social security system was vital, since the deficit generated by the system this year was 27.4 billion reais. Financial markets failed to understand that the Brazilian deficit included state and municipal government deficits, as well as those of state-run enterprises. "The fiscal deficit is the fragile link," he acknowledged. +1 202 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:19:00 PM
From: Steve Fancy	Respond to of 22640

Monsanto (NYSE:MTC) to build Roundup plant in Brazil Reuters, Monday, September 14, 1998 at 17:14 CHICAGO, Sept 14 (Reuters) - Life sciences company Monsanto Co. said Monday it will invest at least $350 million over the next four years to build a plant in Brazil that will make Monsanto's Roundup brand herbicide. In a statement received in Chicago with a Sao Paulo dateline, Monsanto said the plant, which will be in the state of Bahia in northeast Brazil, will employ 350 full-time workers to produce glyphosate, the active ingredient in Roundup brand herbicides. The powerful herbicides are widely used by farmers to kill weeds that can cut crop yields. Monsanto said the plant will require an additional $200 million over the next four years to cover start-up expenses and working capital. Monsanto has invested $380 million over the last three years to expand its production of Roundup at plants around the world, including $60 million in Brazil. "Our investment is a continuation of Monsanto's more than 25-year history serving farmers in Brazil," Monsanto President Hendrik Verfaillie said in a statement. "We're confident in the inherent strength both of Brazilian agriculture and the Brazilian economy." Roundup can be used with Monsanto's popular Roundup Ready crops, which are genetically modified to withstand the herbicide. Brazil, the world's second largest soybean producer behind the United States, has not approved Roundup Ready soybeans, but may do so as early as this week. Roundup was first produced by Monsanto scientists 25 years ago. The product is registered for use in controlling more than 100 weeds in more than 130 countries and is the world's best-selling herbicide. Monsanto's stock closed up 1-1/8 at 58-3/8. chicago.equities.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:20:00 PM
From: Steve Fancy	Respond to of 22640

Brazil dollar outflows slow, real weakens Reuters, Monday, September 14, 1998 at 17:14 Still, Brazil's currency weakened slightly on Thursday as a result of the continuing outflows, closing down 0.08 percent at 1.1800 reais against the dollar in the commercial forex market. Late Thursday night, Brazil hiked interest rates up to almost 50 percent in a bid to keep Brazilian investors in the country, attracting them with the high returns on fixed-income investments. Traders said Monday would be the true test of the measure because much of Friday's outflows were due to orders made on Thursday. Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:22:00 PM
From: Steve Fancy	Respond to of 22640

ADR REPORT - Emerging market highlights - Sept 14 Reuters, Monday, September 14, 1998 at 17:20 ADRS FIRM ON DOW STRENGTH, CLINTON SPEECH ADDS SLIGHTLY NEW YORK, Sept 14 (Reuters) - Emerging market ADRs pushed higher Monday, encouraged more by the rally in equity markets around the globe rather than President Clinton's remarks that strong action needs to be taken to stop the spreading currency crisis. The Bank of New York index of leading ADRs <.BKADR> was up 1.18 points or 1.20 percent to 99.29 in afternoon trading. The Dow Jones Industrial Average closed with a gain of 149.85 points or 1.92 percent to 7945.35. It had been up as many as 244 points in earlier trading. Speaking in New York to the Council on Foreign Relations, President Clinton said: "We have to be ready to respond immediately and with financial force if necessary to the currency crisis if it spreads, especially if it threatens the economies of Latin America." Traders noted Clinton's speech, but did not feel it was a major factor on sentiment. "It's encouraging to see more of the top people focusing on it. At least it's a start," said one ADR trader who requested anonymity. In Brazil, telecommunications company Telebras (NYSE:TBR) led the way, rising 3-11/16 at 59-9/16. Mexico's Telefonos de Mexico (NYSE:TMX) climbing 1-13/16 to 36-3/4. "In the last two to three weeks, a least in Brazil anyway, investors are gravitating towards the telcos, utilities, the large cap stocks that have liquidity to allow them to get out if they want to," the trader added. Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:23:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares end 8 pct higher after G7 statement Reuters, Monday, September 14, 1998 at 18:01 RIO DE JANEIRO, Sept 14 (Reuters) - Brazilian shares surged late Monday to close nearly 8 percent higher, buoyed by a positive trend on Wall Street and a statement of support by the G7 industrialized nations for economies hit by recent turmoil. "The bourse has started to go up again gradually but firmly. The important thing now is that the market is in frank recovery," one dealer said. The Bovespa (INDEX:$BVSP.X) index of leading shares closed 7.78 percent higher at 5518 points on turnover of 415 billion reais. In RIO DE JANEIRO story, please read in 3rd paragraph ".... turnover of 415 million reais" not "... 415 billion..." RIO DE JANEIRO, Sept 14 (Reuters) - Brazilian shares surged late Monday to close nearly 8 percent higher, buoyed by a positive trend on Wall Street and a statement of support by the G7 industrialized nations for economies hit by recent turmoil. "The bourse has started to go up again gradually but firmly. The important thing now is that the market is in frank recovery," one dealer said. The Bovespa (INDEX:$BVSP.X) index of leading shares closed 7.78 percent higher at 5518 points on turnover of 415 million reais. (corrects figure) The dealer added that the statement of support by the Group of Seven (G7) leading industrialized countries had really excited the Brazilian share market. Share prices, which had been trading in positive territory throughout the session, surged after the G7 released a statement saying they would back financial aid programs to emerging market economies if needed. Investors were also encouraged by the upward trend on Wall Street and the Central Bank's decision Thursday to push interest rates up to nearly 50 percent to stop dollar outflows. On Friday, the Bovespa shot up 13.39 percent to close at 5398 points amid the optimism prompted by the rate hike. Before the Central Bank's surprise move, share prices had been seriously undermined by the huge dollar outflows. Brazil lost $310 million through the foreign exchange markets by late afternoon Monday in a sign that the dollar flight was slowing. At the same time on Friday, Brazil had already registered more than double that and by the end of the day net outflows had reaching a whopping $1.7 billion. Traders said gains in preferred shares of electricity utility Eletrobras (SAO:ELET6) along with preferred shares of oil giant Petrobras (SAO:PETR4) had led the charge Monday, rising 15.54 percent and 12.39 percent respectively. Heavyweight blue-chip Telebras (SAO:TELB4), which usually accounts for half total volume, closed 4.55 percent higher at 69.00 reais. tracey.ober@reuters.com)) Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:25:00 PM
From: Steve Fancy	Respond to of 22640

Brazil forex mkts seen losing under $1 bln Reuters, Monday, September 14, 1998 at 18:09 Friday's losses reached a whopping $1.7 billion, bringing total losses so far in September to $12.73 billion and fueling concern that a recent rate hike may not stem the dollar outflow. Late Thursday night, Brazil jacked up interest rates to almost 50 percent in a bid to keep Brazilian investors in the country, attracting them with the high returns on fixed-income investments. Traders said Monday would be the true test of the measure because much of Friday's outflows were due to orders made on Thursday. Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:27:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Gerasul sale draws guarantees from three Reuters, Monday, September 14, 1998 at 20:44 RIO DE JANEIRO, Sept 14 (Reuters) - Three consortia have presented financial guarantees to bid for Brazilian electricity utility Gerasul (SAO:GRSU3), due to be privatized in an auction Tuesday. "Three consortia should compete in the auction tomorrow," Vittorio Perona, electricity sector director for the sale adviser Dresdner Kleinworth Benson in Brazil, said Monday. In a further sign that three groups would present themselves at the auction, the Rio de Janeiro bourse said three brokers -- Doria Atherino, Omega and Bradesco -- had registered to represent the bidding consortia. Perona said France's Eletricite de France and Total (SBF:TOTF) were leaders of one of the bidding groups, Belgium's Tractebel Energy (BRU:TREB.T) led another and the third was formed by American Energy (AES) (NYSE:AES), Rio Grande Energia and Amoco's (NYSE:AN) Panamerican Energy. Gerasul, one of the four major generating divisions of the state-owned energy holding company, Eletrobras (SAO:ELET6), is the first big generator to go under hammer. Its sale was repeatedly delayed as the regulatory body set up rules and set tariffs. The sale could be delayed once again if a pending lawsuit to block the privatization is not annulled in federal court. But Perona said he was confident the lawsuit would be resolved and the auction would go ahead as planned at 10 a.m. (1300 GMT) at the Rio stock exchange. Copyright 1998, Reuters News Service

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:32:00 PM
From: Steve Fancy	Respond to of 22640

U.S. Support For Latin America Helpful, But $15B Not Enough By CAROL S. REMOND Dow Jones Newswires NEW YORK -- U.S. President Bill Clinton's emphatic show of support for Latin America on Monday may tide Brazil over through October elections, but dollars rather than words will be necessary to help the regional giant ultimately overcome its economic woes. Clinton on Monday said his administration is ready to act to calm world financial markets rocked by a series of fiscal and monetary crises since last year. To prevent the further spread of the international financial instability, Clinton said the U.S. would support the International Monetary Fund's use of its remaining $15 billion in emergency funds for Latin America. It was Clinton's first public statement on the rising volatility facing Latin America, and he left no doubt that the U.S. doesn't want collapsing currencies in its own backyard. Experts said the promise of money alone may be enough to stop the hemorrhaging of capital from Brazil until Oct. 4 presidential elections. Already on Monday, preliminary estimates put the day's outflow at below $300 million compared to $1.7 billion on Friday. Analysts said they'll continue to carefully monitor capital flight in the next few days. "People are now focused on capital outflows. And if there is no slowdown, it's going to look fairly bad," said Richard Casey, Donaldson Lufkin & Jenrette's emerging market strategist said. And if the kind of selling seen in the last two weeks continues, $15 billion won't cut it, they say. Since volatility hit in August, the foreign exchange reserves of Brazil alone have plunged to $50 billion from $70 billion. "We need to see about $30 billion made available to Latin America," said Christian Strake, a Latin American economist at BT Alex Brown.

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:33:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Franco: Clinton Remarks Were "Beyond Expectations" Dow Jones Newswires BRASILIA -- President Clinton's assurance of IMF fund availability for Latin American markets was welcomed by both Central Bank president Gustavo Franco and President Fernando Henrique Cardoso on Monday night. They were reacting to Clinton's speech earlier Monday in New York in which he said the world's richest financial nations are ready to tap a $15 billion IMF emergency fund if needed to help stabilize Latin American markets. In his daily press briefing presidential spokesman Sergio Amaral said Cardoso was "satisfied" about Clinton's declarations. According to Amaral, Cardoso feels that Clinton's statement "is proof that the U.S. is perceiving Brazil as 'different' from other markets". Central Bank president Gustavo Franco said through his press office that "Clinton's words went beyond all expectations we had." Franco added that saying that funds of the General Agreement on Borrowing (GAB) are available, "is without any doubt good news". -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:34:00 PM
From: Steve Fancy	Respond to of 22640

Brazil To Auction New Floating Dlr Note NBC-F Thursday Dow Jones Newswires BRASILIA -- Brazil's Central Bank said Monday that it will hold its first auction Thursday of a new note linked to the dollar in the floating-rate market. The Central Bank is offering 500 million reals ($1=BRL1.18) of the so-called NBC-F notes with a maturity of one year. The annual coupon for the NBC-F is 6% plus the real's depreciation against the dollar. The Central Bank announced the introduction of the NBC-F last week in an attempt to provide hedge to investors in the floating-rate market. Brazil already sells notes linked to the dollar in the commercial exchange market, known as NBC-Es. The announcement of the new instrument coincided with a massive outflow of capital through the floating-rate market which is used for some remittances by multinationals and individuals.

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:35:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Bier -4: U.S. Rate Cut Would Help World Economy Dow Jones Newswires Responding to reporters' questions, Bier stressed that his country isn't about to take steps out of line with its strategy of strict fiscal discipline. Asked whether import curbs or currency controls are being discussed to help Brazil stabilize its financial system, Bier said "no." Nor would Brazil resort to a wholesale devaluation of the real, as some investors have feared, he said, noting the kind of policy Brazil is currently implementing will continue. The Central Bank regularly weakens the real with an adjustment every two to five working days, which it did Monday. But the currency also moves within a wider band that was last modified in January. He said Brazil won't need to turn to international aid agencies for assistance, despite talk Brazil may need the IMF's support and comments from IMF officials that the institution could assist Brazil if necessary. Asked whether Brazil would turn to the IMF for emergency aid, Bier reiterated, "We don't view the need at this point in time" to do so. While Brazil has "an excellent relationship" with the IMF, it doesn't need help from the agency, because Brazil is implementing the correct policies, which should eventually stabilize the financial situation and garner support from investors. It also has sufficient foreign exchange reserves, he said. For now, Brazil has more than $50 billion in usable foreign exchange reserves, he said. Bier noted that Brazil's recent hike in interest rates will increase the cost of servicing domestic debt, but the key question is how long those rates remain high. The government can't know now how long that will be the case, because their level is related to the international environment, he said. In any case,t the government hopes to be able to reduce them again soon, he added. "I hope that will be a short-term process," he said. The Brazilian central bank was forced to raise the Tban interest rate last Thursday to 49.75% from 29.75% in an effort to defend the real. In any case, Brazil's domestic debt is a "non-issue" to the government, he said, arguing global credit rating agencies have twisted it into a bigger issue than it is. Turning to moves by other countries, Bier also said he feels the Group of Seven (G-7) industrialized nations can help to calm world markets fearing the further spread of financial crises. Given that most of the crisis has had a component of "irrationality" in the contagion, "some degree of coordination could help a lot" in putting it into perspective, he said. Also, a U.S. interest rate cut would help Brazil as well as the world economy, he said. It would be an "important contribution for the rebalancing of the whole world economy." "I think it's something that could be done," he said. "There are technical grounds for it." -By Kristi Bahrenburg, tel: (202) 862-9295; or e-mail: kristi.bahrenburg@cor.dowjones.com

To: SouthFloridaGuy who wrote (8001)	9/14/1998 10:37:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Court Clears Gerasul Sale Set For Tuesday Dow Jones Newswires BRASILIA -- A Brazilian regional federal court late on Monday cleared the privatization auction of federal electric energy generator Gerasul, slated for Tuesday. Judge Ellen Northfleet of the fourth regional federal court in Porto Alegre upheld an appeal by the government's legal defense office, known as AGU, against an earlier lower court injunction blocking the sale. Gerasul, the electric power generator for the south of Brazil, will is scheduled to go on the block at the Rio de Janeiro stock exchange at 1300 GMT Tuesday for a minimum asking price of 945.7 million real (BRL) ($1=BRL1.17). Three major consortia have entered bids for the company. One is formed by an association between the conglomerate Rio Grande Energia and US companies AES and oil group Amoco. A second consortium is led by Electricite de France, or EDF, in partnership with French oil group Total and Tractebel of Belgium, while Sithe do Brasil forms a third group. A lower court in Santa Catarina state earlier this month had suspended the sale, accepting charges that there should be stricter controls by the federal authorities over the future owners. Two more requests for injunctions against the auction were entered in local federal courts in Rio Grande do Sul on Monday but no rulings had been made by Monday night, a federal court spokesman in Porto Alegra said. Brazilian traders attach large importance to the success of the auction as it could be an important indicator of continued confidence in Brazil's attractiveness for investors despite the current financial turbulence hitting local markets. -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org