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

To: Steve Fancy who wrote (8268)	9/18/1998 10:58:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Telerj (SAO:TERJ4) cuts phone install fees Reuters, Friday, September 18, 1998 at 10:49 SAO PAULO, Sept 18 (Reuters) - Brazilian fixed-line phone company Telecomunicacoes do Rio de Janeiro (SAO:TERJ4) said it is cutting its telephone installation fee to 77.54 reais from 142.68 reais in preparation for competition. Telerj is controlled by one of the 12 holding companies carved out of Telebras (SAO:TELB4) and sold at a privatization auction on July 29. "This is part of the strategy of the new administration that has been with the company for almost a month," a Telerj spokeswoman said. Telerj is part of the Tele Norte Leste fixed-line holding company that was bought by a Brazilian investment group headed by construction firm Andrade Gutierrez. The three fixed-line companies are expected to face competition by the end of next year because the government is selling concessions to operate parallel "mirror" phone companies in those regions. Telerj president Geraldo Pereira Araujo is slated to give a press conference Friday afternoon to discuss the details of the rate reduction. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8268)	9/18/1998 11:00:00 AM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

Brazilian Investors, Not Foreigners, To Seal Country's Fate By CAROL S. REMOND Dow Jones Newswires NEW YORK -- Domestic investors and their confidence in President Fernando Henrique Cardoso will determine whether Brazil's current market instability escalates into a full-fledged crisis, analysts say. Markets at the moment are focusing on prospects for an international aid package for the Latin American giant's besieged economy. The International Monetary Fund has said it will pitch in $15 billion for Latin America if needed, and other institutions are also apparently considering putting up funds. But regardless of what foreign institutions and investors opt to do, it's likely to be Brazilians themselves who determine the outcome of this market turmoil. Brazil must roll over an eye-popping 100 billion reals in short-term domestic debt before year-end, according to analysts' estimates and government figures; the total stock of local debt outstanding tops 300 billion reals. "It's pretty clear that Brazil has been talking to the International Monetary Fund and that the U.S. Treasury is also looking at something. But the issue is whether or not Brazil will be able to roll over securities locally," said Paul Dickson, Lehman Brothers' emerging market strategist. "Locals will be key. If they believe the government, everything will be okay and the capital outflows will stop," agreed David Harding, a portfolio manager at Nicholas Applegate. Although some are quick to draw parallels between Brazil's massive local debt and that of Russia, foreigners hold only about 10% of the Latin American country's domestic fixed-income instruments. In Russia, foreigners were caught holding 25% of local debt when the government announced in August that it would restructure its Treasury bonds. Stressing the severity of the situation, Bank of America last week wrote in a report that "the piling up of short-term debt is a fundamental problem that the government can only deal with with a major fiscal adjustment, or worse a devaluation." So far in August and September, almost $20 billion have fled Brazil's capital markets, quickly bringing reserves to about $49 billion. This month alone capital outflows total about $15 billion, with $224 million exiting Thursday. And although Brazil has so far been able to meet its financing needs primarily through its domestic markets, analysts are beginning to question the viability of that policy. A total of $33 billion in short-term domestic debt is due to mature in September, with an additional $47 billion coming for redemption in October, and about $10.25 billion in November and December. Brazil also needs to make a little over $2 billion in payments on its international debt obligations, including Brady bonds and Eurobonds. The Treasury opted to cancel its regular domestic debt offering this week, foreseeing demands for prohibitively high rates. The previous week, the Treasury placed only a fourth of the 266-day paper it was looking to sell. After the market closes Friday, the Treasury will publish the tender for Tuesday, signaling whether it's willing to brave capital markets next week. Determined to defend its currency, Brazil late last week raised the ceiling on its interest rates to 49.75% - so far they have climbed to about 40% - and said it would cut government spending. "As investors perceive higher interest rates as a signal of difficulties in rolling over local debt both foreigners and locals will exit the market," Bank of America said in its report. To be sure, foreigners also will play a role. According to Bank of America, $15 billion to $20 billion in foreign money invested in real-denominated instruments could flee Brazil.