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

To: Steve Fancy who wrote (8045)	9/15/1998 1:37:00 PM
From: djane	Read Replies (1) \| Respond to of 22640

Brazil Bovespa Index ^BVSP 1:34PM 6755 +937 +16.10% <eom>

To: Steve Fancy who wrote (8045)	9/15/1998 1:43:00 PM
From: djane	Read Replies (2) \| Respond to of 22640

Can anyone really dispute the premise that TBR/TBH under $120 is a very good purchase for a long-term investor given the impending US/IMF/G-7 bailout/safety net and IR rate cut, expected Brazilian reforms (deficit/Social Security cuts) after the 10/4/98 election, and late 9/98 Brazil/US listings of 12 TBR companies (valued at $295/share in late 7/98 or 1.5 months ago)?

To: Steve Fancy who wrote (8045)	9/15/1998 3:19:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Bovespa had big foreign outflow Sept 1-10 Reuters, Tuesday, September 15, 1998 at 10:12 SAO PAULO, Sept 15 (Reuters) - The Sao Paulo stock exchange (Bovespa) said Tuesday it saw a net 1.155 billion reais worth of foreign investment leave the bourse in the first 10 days of September. Foreign buys during the period totalled 745.39 million reais, while foreign sales amounted to 1.9 billion reais, the exchange said in a statement. The figures resulted in accumulated net foreign outflows of 1.659 billion reais so far this year. Market players attributed the big outflow to investors fleeing from Brazilian stocks amid persistent worries about the country's economic outlook. The bourse had posted a foreign net capital outflow of 1.724 billion reais in August, after posting a net inflow of 423 million reais in July. ($1=1.1800 reais) noriko.yamaguchi@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8045)	9/15/1998 3:20:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares soar, renewed optimism on G7 support Reuters, Tuesday, September 15, 1998 at 10:48 SAO PAULO, Sept 15 (Reuters) - Renewed investor optimism over Monday's news that G7 industrialized nations would support Brazil amid the recent crisis caused local shares to erase early losses by mid-morning Tuesday, brokers said. The key Bovespa index (INDEX:$BVSP.X) was up 3.9 percent at 6,047 points by 1108 local time/1048 EDT/1408 GMT, after dipping more than 3 percent earlier on disappointment over a privatization auction. The government sold off a controlling stake in power utility Gerasul (SAO:GRSU6) for its minimum price of 945 million reais on Tuesday in an auction that drew just one bidder. The outcome, which dashed expectations of a premium, sent stocks tumbling. However, investors quickly digested the negative news and turned into buyers, brokers said. "More important than a single privatization is the international mood, that's where all eyes are," said Roberto Dotta Filho, a fund manager at Tudor Asset Management. Preferred shares in Eletrobras (SAO:ELET6), the former parent company of Gerasul, plunged more than 10 percent minutes after the auction, but recovered by mid-morning, rising 5.38 percent to 23.50 reais by 1120 local time/1020 EDT/1420 GMT. Preferred shares in Gerasul (SAO:GRSU6), which resumed trade following the auction, were still sharply off by 5.17 percent at 1.10 reais. A recovery in the Dow Jones index (INDEX:$INDU) also buoyed sentiment in Brazil, brokers said. noriko.yamaguchi@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8045)	9/15/1998 3:21:00 PM
From: Steve Fancy	Respond to of 22640

TABLE-Brazil Telebras posts H1 loss after spinoff Reuters, Tuesday, September 15, 1998 at 13:02 SAO PAULO, Sept 15 (Reuters) - Telebras, the holding company for the remaining assets of the telephone monopoly following its July 29 privatization, posted the following financial results for the first half. H1 1998* H1 1997 EPS loss 0.00023 real n/a Net loss 76.758 mln n/a Oper loss 76.336 mln n/a Net worth 242.545 mln n/a NOTE: All figures are reported in reais and not adjusted for inflation. * Figures represent Telebras holding company results after the company was split into 12 sub-holdings that were privatized in July. The 12 sub-holdings are slated to begin trading independently on September 21. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8045)	9/15/1998 3:23:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares surge 15 pct in strong correction Reuters, Tuesday, September 15, 1998 at 14:16 SAO PAULO, Sept 15 (Reuters) - Brazilian stocks roared upward in midday trade on Tuesday, in what traders called a strong correction of recent panic selling that had sent prices plunging below share value. "The market is going crazy right now and any excuse is valid for investors," John Carioba at brokers Indusval said. The 57-share Bovespa index (INDEX:$BVSP.X) rocketed up 15.0 percent to 6,692 points at 1424 local time/1324 EDT/1724 GMT. The index started down by more than 3 percent following weak interest at the privatization auction of power utility Gerasul (SAO:GRSU3). Telebras (SAO:TELB4) shares soared up 20 percent on the rally. Traders said the market was totally ignoring first half losses posted by the former state telecoms holding. With book value for Telebras at 100 but trades at around 60 reais last week, there was plenty of room for maneuver, they said. Telebras preferred shares were up 19.86 percent at 82.70 reais at 1456 local/1356 EDT/1756 GMT. The market recovered from its early disappointment on the Gerasul sale as a climate of optimism about G7 support for damaged emerging market economies took hold. Rumors of a $40 billion bailout for Latin America from the International Monetary Fund (IMF) were also boosting shares. The Group of Seven (G7) leading industrialized nations boosted sagging stock markets across Latin America Monday with a promise to back IMF aid packages to emerging economies. Traders said that statement lifted the mood considerably and investors who were short took it and other signs of outside help as a cue to cover positions Tuesday. Other Brazilian heavyweight shares were also on a strong rebound, with Petrobras (SAO:PETR4) preferred up 16.54 percent at 148 reais and Eletrobras (SAO:ELET6) up 18.39 percent. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8045)	9/15/1998 3:25:00 PM
From: Steve Fancy	Respond to of 22640

Latam nations said in talks on special loan fund Reuters, Tuesday, September 15, 1998 at 14:43 BRASILIA, Sept 15 (Reuters) - Latin American countries are in talks with international lending agencies to create a special loan fund for the region, an official at Merrill Lynch in Brazil said Tuesday after meeting Finance Minister Pedro Malan. Latin America, in particular Brazil, has been battered by the global crisis in emerging markets and rumors were rife this week that the International Monetary Fund (IMF) would step in with cash to prevent a devaluation in the Brazilian currency, the real. But officials were negotiating a loan fund -- estimated by markets at $100 billion -- which would allow them to borrow without committing to an IMF economic austerity plan, said Merrill Lynch senior international consultant Marcilio Moreira. "It would work like a kind of special credit," the former economic minister told reporters following a meeting between Malan and 30 market analysts. The fund would include resources from the IMF, the World Bank, the Inter-American Development Bank and the United States Federal Reserve, Moreira said. U.S. President Bill Clinton said Monday the IMF should stand ready to use $15 billion in emergency funds should the economic crises in Russia and Asia threaten to topple the economies of Latin America. But Brazilian government officials repeated they saw no need to ask the IMF for help at this stage. Brazil raised interest rates to around 50 percent from about 30 percent last week in an effort to contain a massive outflow of dollars which has drained foreign reserves to near three-year lows. The country needs to maintain a healthy pile of foreign cash to defend the real against speculative attack. Foreign currency reserves have dropped to around $50 billion from close to $70 billion at the beginning of August. joelle.diderich@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8045)	9/15/1998 3:26:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil dollar outflows seen under $600 mln Tuesday Reuters, Tuesday, September 15, 1998 at 14:52 SAO PAULO, Sept 15 (Reuters) - Dollar outflows from Brazil's foreign exchange markets are seen dipping to under $600 million on Tuesday, slowing from a recent daily average of $1.5 billion, dealers said. "There are expectations that money raised in recent privatization auctions would start rolling in," said one forex dealer. Dealers reported a net $66 million inflow by 1500 local/1800 gmt on Tuesday and speculated the day would end with an outflow of no more than $600 million. Brazil sold electricity generator Gerasul (SAO:GRSU6) for 945 million reais ($808 million) to Belgium's Tractebel (BRU:TREB.T) on Tuesday. Part of that payment must be made this week. On Monday, the government also sold Bemge bank <BEMG4.SA > to Banco Itau (SAO:ITAU4) for 583 million reais ($498 million). Dealers speculated Itau would be raising some of the cash needed in overseas markets. Dollar outflows from the country's commercial and floating rate markets were also slowing down as the effects of last week's central bank interest rate hike sank in. The bank's Tban assistance lending rate was raised to 49.75 percent from 29.75 percent on Thursday. On Monday, dollar outflows declined to $898 million, bringing losses so far in September to $13.628 billion. The local currency market was stabilizing on expectations of a smaller outflow on Tuesday. The real was up 0.04 percent at 1.1795 to the dollar by 1530 local/1830 gmt. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8045)	9/15/1998 3:27:00 PM
From: Steve Fancy	Respond to of 22640

Emerging mkt debt up on package talk, short cover Reuters, Tuesday, September 15, 1998 at 14:52 NEW YORK, Sept 15 (Reuters) - Emerging market bond prices rallied Tuesday, boosted by short covering and hopes for a big relief package for struggling Latin American economies. Analysts said there was market talk that the International Monetary Fund and other lenders, including the United States, could come up with a package of from $50 billion to $150 billion to help the ailing economies of Latin America, especially Brazil. "People are kind of grooving. Maybe the Brazilians won't devalue (the currency) this week," said Paul Dickson, senior sovereign strategist for emerging markets at Lehman Brothers. Dickson said such a package could be seen as a "line in the sand" aimed at choking off the financial turmoil that has roiled emerging markets since early last year. Analysts said Ecuador's decision Monday to devalue its currency had little impact on emerging markets debt. They said markets were underpinned partly by short covering - the purchase of securities by dealers to replace those borrowed at the time of a short sale. Short selling usually is done by investors who believe a security's price will drop. A trader said, "We've had a big rally in the Bradys across the board. The market is clearly oversold." He added that it was difficult to tell how much of the rebound was caused by short covering or by rumors of the package, but the speculation was helping the rally. Firmer equities in Sao Paulo also were a sign of confidence about Brazil and its currency, the real. Sao Paulo's Bovespa stock index (INDEX:$BVSP.X) was up almost 13 percent. Brazilian C bonds <BRAZILC=RR>, a benchmark for emerging market debt, were up 3-1/2 to 57-3/4 bid. "What the market is doing now is a little bit of short covering. Brazilian paper is extremely scarce right now," said Jaime Valdivia, senior Latin American debt strategist at Morgan Stanley Dean Witter. Latin American debt was little changed despite Ecuador's 15 percent devaluation of its currency Monday, and announcement of belt-tightening measures. "I think to a large extent Ecuador's problems have been discounted in the bond prices," said an analyst who asked to remain anonymous. She added that Ecuador's moves were welcomed by the market since they in part would help the Andean nation protect its reserves, now at $1.7 billion. Ecuador's par bond was off 1/4 to 40 and its discount bond was up 1-3/8 to 44-7/8. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8045)	9/15/1998 3:31:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Latam Capital Crunch May Outlast Tequila Effect: Moody's Dow Jones Newswires NEW YORK -- Moody's Investors Service said Tuesday that the ongoing reduction in capital flows to emerging markets is likely to place "particular stress on heavily indebted Latin American nations", with consequences possibly more long lasting than those following the Mexican peso crisis mid-1990s. In a press statement, Moody's said the region's difficulties are "not likely to resemble the relatively short hiatus in market access in 1995 during the Mexican Tequila Crisis because this time around, the world economic environment is considerably less benign." Moody's said Latin American countries will find it increasingly difficult to refinance the large volume of debt maturing over the next several years due to continuing tight credit, a poor outlook for export earnings and low prospects for significant help from international agencies such as the International Monetary Fund. Moody's said it "points particularly" to the foreign currency ceilings of Mexico and Argentina, both under review for a downgrade, as well as that of Brazil, which the rating agency lowered on Sept.3. Moody's said that in the period 1990-1997, the three countries played the dominant role in the region's placement of $200 billion in bonds, 45% of all such debt issued by emerging markets worldwide. Moody's said countries in the region currently have approximately $687 billion in total debt outstanding. Foreign capital inflows have financed a rapidly widening current account deficit throughout the region in recent years, Moody's said, with Argentina, Brazil and Mexico accounting for approximately 80% of the total. Moody's said credit spreads between emerging market debt and comparable U.S. Treasury rates have nearly tripled over the last two months, to over 1,500 basis points from around 600 basis points. The rating agency said it expects those elevated spreads to "remain wide over the next year, at least" in Latin America and most other emerging markets. Moody's said the Tequila effect was relatively short-lived largely because of the financial assistance provided by the U.S. and the IMF as well as swift and effective policy responses by Latin American governments. The current situation, Moody's warned, is more difficult because of Russia's recent default on certain obligations, the "confusion caused by the imposition of complicated exchange controls by Malaysia, as well as negative sentiments regarding the health of the U.S. and European economies." The agency said the ability of the IMF and other official creditors to act as lenders of last resort is limited because of the sizable commitments they have already made to Asia and Russia. "Moreover, the retrenchment of the international bond and credit markets is likely to exacerbate any remaining structural weakness resulting from delayed or incomplete reform efforts, leaving certain Latin American countries in a very unpleasant situation," Moody's said. It added that "even well-disciplined countries that already have been tightening policies as part of their restructuring effort will undoubtedly be forced to tighten even further to adjust to the reduced emerging markets credit access." Moody's said governments will find it difficult to compensate for the drop in capital inflows with decisive policy responses alone, "so it is inevitable that the difficulty of meeting external payments obligations has grown." "The likelihood that countries in the Latin American region will resort to capital controls, debt rescheduling, debt moratoria, or any combination of those actions before their reserves are fully depleted by repayment of both short- and long-term debt as well as speculative capital outflow has increased significantly," Moody's concluded.

To: Steve Fancy who wrote (8045)	9/15/1998 3:32:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Debt Load Said To Hurt Global Investor Confidence Dow Jones Newswires NEW YORK -- Brazil's enormous debt load is undermining investors' confidence, according to Dan Berns, vice president at Global Special Investments, a hedge fund of ING Barings Capital Corp. Speaking at a distressed securities conference organized by the Organization of Business Communications, Berns said the recent financial turmoil in Russia highlights Brazil's problems. 'Brazil has a similar amount of debt load and people have exhibited the same lack of confidence in their currency, the real,' Berns said. 'Because of a similar situation, the Russian contagion is not only psychological, it's real,' he added. He said that all Latin American countries are interconnected in that weakness in one spills over into the other, citing Brazil and Mexico as prime examples. However, he said Brazil is more vulnerable to a potential default than Mexico. He said investors had more confidence in Mexico's political strength and its currency wasn't under the same kind of pressure. -Pallavi Gogoi 201 938 2122; Pallavi.Gogoi@Cor.DowJones.com

To: Steve Fancy who wrote (8045)	9/15/1998 3:33:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Malan, Argentine Econ Min Official To Meet Wed Dow Jones Newswires BUENOS AIRES -- Brazilian Finance Minister Pedro Malan is scheduled to meet early Wednesday with an Argentine Economy Ministry official to discuss possible joint macroeconomic policies the two countries can take to minimize the impact of the current turbulence in global markets, an Argentine ministry spokeswoman said. "The meeting will be the first of a series of meetings the two countries plan to hold in order to monitor together the impact the international crisis could have on Mercosur's two key players," the spokeswoman said. The Argentine official, Economic Planning Secretary Rogelio Frigerio, was slated to depart Tuesday for Brasilia to meet with Malan, she said. Mercosur, the customs union formally known as the Southern Cone Common Market, comprises Argentina, Brazil, Paraguay and Uruguay as full members, with Chile and Bolivia as associate members. The two officials are also expected to discuss fiscal measures Brazilian President Fernando Henrique Cardoso may take if he wins re-election on Oct. 4, the spokeswoman said. Looking ahead, Frigerio and Undersecretary of Financing Miguel Kiguel are slated to travel to Washington next month to discuss Argentina's financing needs with multilateral organizations, the aide said. As reported, Argentina is working to land a contingency fund from the International Monetary Fund, the World Bank, the Inter-American Development Bank and the U.S. Export-Import Bank. Those lenders would put up cash from which Argentina could draw should the current global crisis continue to make capital markets too expensive. The funds could surpass the $5.8 billion in financing Argentina needs through the end of first quarter 1999. -By Camilla Gallagher; 541-313-1918; cgallagher@ap.org

To: Steve Fancy who wrote (8045)	9/15/1998 3:34:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Gerasul Sale Is Bright Spot Amid Market Gloom By STEPHEN WISNEFSKI Dow Jones Newswires SAO PAULO -- The successful privatization of a Brazilian electricity generator Tuesday should give a sorely needed dose of confidence to the country's fragile financial markets, analysts said. The government sold a controlling stake in Centrais Geradoras do Sul do Brasil (E.CGB), known as Gerasul, for the minimum asking price of 945.7 million reals (BRL)($1=BRL1.18) to Belgian utility Tractabel SA (N.TRB), the sole bidder. Gerasul is the first generator to be turned over to private investors following two years of state divestment from power distribution assets. Although market and government sources had anticipated ample competition and a premium over the minimum price of up to 30% in the days leading up to the auction, analysts said they weren't disappointed with the result. "It's not a great success, but it was a positive result without a doubt," said Fernando Oliveira, an analyst at Sao Paulo's Banco Fator. "The minimum price was reasonable, but you have to remember that it was set (in January) when the economic scenario was completely different." Analysts had pointed to Tuesday's auction as an important indication of foreign willingness to brave Brazil's financial markets, where stock prices have tumbled, fresh foreign investment has evaporated and the currency has come under pressure. "Obviously, it could have been better, but the cash flow is very good," said Roberto Dumas, utilities analyst at BBA/Paribas in Sao Paulo. "In this turmoil, 1 billion reals coming in is a great result." Brazil's foreign reserves have dropped close to the $50-billion mark from $70.21 billion at the end of July. In an effort to attract bidders, the National Development Bank (BNDES) - which oversees Brazil's massive privatization program - announced last week that it would provide financing for up to 40% of the Gerasul minimum bid price. Belgium's Tractebel said Tuesday that it wouldn't take advantage of the BNDES credit line, making the purchase price sound even more attractive to analysts. "I would say the auction was a success because it introduced a major new player into the Brazilian market, and they're coming in with all new money," said Charles Barnett, utilities analyst at Lehman Brothers in Sao Paulo. "It's a big vote of confidence that a foreign company is willing to invest $800 million at this point." Brazil's stock market is also putting its stamp of approval on the auction result. After slumping in the first half hour of trading, the Sao Paulo Stock Exchange's benchmark Bovespa Index soared 16% to 6755 just past midsession. "Initially, the market was disappointed (with the result) because there was only one bidder paying the minimum," said BBA/Paribas's Dumas. "But then they woke up and realized that the result was actually pretty good, especially considering Tractebel won't use BNDES money." Gerasul ordinary shares were up 18% to BRL1.18. Shares in Gerasul's former parent company Eletrobras (E.CEB) had tacked on 16.6%, trading at BRL26 per thousand. While the auction results were widely viewed as positive, even Tractebel acknowledged that now is a risky time to be investing in Brazil. Tractebel Director Gil Maranhao said that the company had considered dropping out of the race but that a "belief in the Brazilian market" helped Tractebel overcome doubts.