Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Steve Fancy who wrote (8409)	9/22/1998 4:18:00 PM
From: Steve Fancy	Respond to of 22640

CORRECTED-US Summers--no comment on talk of Brazil Reuters, Tuesday, September 22, 1998 at 15:12 In New York story headlined "US Summers--no comment on talk of Brazil swap deal" read second paragraph as ...on his way into a briefing ... instead of ...after a briefing ... (Corrects to show briefing had not yet taken place). A corrected version follows: NEW YORK, Sept 22 (Reuters) - U.S. Treasury Deputy Secretary Lawrence Summers declined to comment on reports of an impending announcement of a $50 billion swap facility for emerging markets, particularly Brazil. Speaking to reporters here on his way into a briefing, Summers said: "I have nothing for you on that. No comment." Earlier Tuesday, financial market sources speculated that the U.S., perhaps with the other Group of Seven countries, was putting together a package to stabilize the battered emerging markets, particularly Brazil. The main initiative, some said, was a hard currency pool of $50-60 billion to which in theory, all emerging market countries would have access. It would be tagged as a "swap facility" but would probably not involve any meaningful collateral. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8409)	9/22/1998 4:20:00 PM
From: Steve Fancy	Respond to of 22640

LatAm mkts surge following rises in Asia, Europe Reuters, Tuesday, September 22, 1998 at 14:47 By Noriko Yamaguchi SAO PAULO, Sept 22 (Reuters) - Major Latin American stocks surfed higher on Tuesday after bourses in Asia and Europe set the trend for higher prices, brokers in the region said. Shares in Brazil kicked off higher with the market's key Bovespa index (INDEX:$BVSP.X) soaring more than four percent in early trade. The buying wave caught on across the region with investors also cheering a firmer start on Wall Street. The Dow, however, quickly retreated some. "Markets in the region have been and will be prey to performances in overseas markets until some concrete direction emerges from inside," said Manlio Arena, economist at Banco Pontual in Sao Paulo. Most brokers said investors in Brazil -- the region's most liquid market -- were not willing to take fresh positions until the general elections on October 4, but sentiment was lifted at least on Tuesday by equity gains around the globe. Asian bourses rebounded as a late wave of public pension fund buying helped pull Tokyo out of a 12-year low posted on the day before. European markets followed suit, setting the scene for Latin American stocks. In Brazil, activity was centered on newly debuted telecom shares like Telesp Participacoes preferred. (SAO:TLPP4) Trading began on Monday in the 12 telecom firms split off Brazil's former telephone monopoly Telebras, which was privatized on July 29. Telesp shares, one of the most sought-after among the dozen, soared over 10 percent at the open. Conversely in Brazil's foreign exchange market, the real weakened in early trade as persistent concerns over dollar outflows pounded on the currency. Dealers estimated about $518 million exited the country through its forex markets on Monday, showing the U.S. currency continued to escape Brazil. In Argentina, share prices also opened higher echoing stronger foreign bourses. The MerVal index <.MERV> was up 3.7 percent in early trade. Stock investors in Chile were also bracing for a higher session Monday, cheering overnight rises in Asia. Players were expected to monitor any fallout from Clinton's meeting with Japanese Prime Minister Keizo Obuchi later today. Santiago's IPSA <.IPSA> of the leading 40 shares was up 1.86 percent in early trade. Mexican stocks were also surging, with the Bolsa index <.MXX> jumping 4.15 percent within the first 30 minutes. "You can feel a totally different expectation. Asia is strong and there is more talk about aid for Latin American countries," said one local broker. Market sentiment has been improving on hopes international lending agencies and the world's rich countries would help the region in case of an emergency. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8409)	9/22/1998 4:21:00 PM
From: Steve Fancy	Respond to of 22640

Speculation swirls about G7 emergency fund plan Reuters, Tuesday, September 22, 1998 at 14:29 By Henry Engler LONDON, Sept 22 (Reuters) - Speculation was mounting in financial markets on Tuesday that world powers were preparing a mutli-billion dollar rescue fund for emerging market nations. People familiar with the work of the U.S. Treasury and international agencies such as the International Monetary Fund told Reuters a new initiative could be imminent. Crisis-torn Brazil is seen as the key beneficiary of any rescue. An international monetary source in Washington, speaking on condition of anonymity, said the IMF and Brazil were "examining options on the policy front," but added there had been no request for money. Britain, which holds the presidency of the Group of Seven industrialised nations, said it was unaware of any plan to create an emergency fund. Bank of England governor Eddie George is currently in Latin America, site of some of the most intense market carnage. In London, visiting top U.S. central banker William McDonough declined to comment. The talk, which has been running for days but has now gained credence in financial circles, is that anywhere between $50 billion and $120 billion could be pooled together to provide funds for ravaged economies such as Brazil. "There does seem to be a rescue for Brazil brewing," said one senior banking official. The IMF is strapped for cash, and few think it has a good chance of getting new funds from shareholder governments quickly. Sources said any resuce package would be a multi-pronged effort, including funding from G7 coffers and potentially other multilateral agencies. The Group of Seven comrpises Britain, Canada, France, Germany, Italy, Japan and the United States. Agencies such as the Inter-American Development Bank, the World Bank and others have also been mentioned as potential sources of money. "With the combination of a little from the IMF, something significant from the IADB, and something from G7, you could put together a $50 billion package that would be available to Brazil," the senior banker said. The remaining $50 to $70 billion would be used for other emerging economies in crisis. The primary purpose of the plan would be to halt the recent tide of capital outflows from Brazil and prevent the crisis in the developing world from engulfing Latin America. The region is seen as critical to the U.S. economy's health, and thus to world growth. "I think they have to come up with something and this plan might buy them some time," said another banking source. Financial markets were rife with alternative versions of the same plan, with one option envisaging Brazil and others gaining access to G7 central bank credit, or currency swap lines. A specialist information service called I.D.E.A. published a report quoting "sources in various policy circles" as suggesting there was a growing willingness in G7 countries to put together a package to put a floor under global risk. The I.D.E.A. report spoke of a potential package totalling $50 billion facility for crisis countries that would probably not involve any meaningful collateral. Bankers say the model for any Latin America rescue effort was the Mexican bailout in 1995. During that crisis, the U.S. Treasury provided $20 billion in currency swaps and guarantees from the so-called Exchange Stabilisation Fund, a foreign currency war chest which the U.S. government can use without authorisation from Congress. Congress last week approved just $3.4 billion for the IMF, far short of the $18 billion the White House had requested to fend off the global financial meltdown. In Britain, the British Treasury also said it was unaware of any impending announcement of such a programme. The Bank of England, however, confirmed that governor Eddie George was visiting Argentina on Tuesday. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8409)	9/22/1998 4:23:00 PM
From: Steve Fancy	Respond to of 22640

Brazil nears IMF deal, talking to Fed -US analysts Reuters, Tuesday, September 22, 1998 at 14:23 By Apu Sikri NEW YORK, Sept 22 (Reuters) - Brazil has nailed down the broad outlines of an agreement with multilateral lending agencies including the International Monetary Fund, and is talking informally with the U.S. Federal Reserve about a contingency credit facility, according to U.S.-based economists. But the government of President Fernando Henrique Cardoso is unlikely to announce any such agreement until after presidential elections on Oct. 4, given the unpopularity in Brazil of IMF-monitored programs, according to analysts. Brazil has done "background work now for ultimate agreement that would come after the elections," said Carl Ross, managing director of sovereign research at Bear Stearns & Co. Brazil "has been looking for technical assistance to a fiscal package and they have an implicit agreement to their approach" from the IMF, said Joe Petry, chief economist for Latin America at Citicorp Securities. "But they would very much like to announce it after the elections if that is possible," he added. Market speculation has focused on a broad-based rescue package for emerging markets around the world, arranged by the Group of Seven major industrial nations. But U.S. economists said multilateral and U.S. efforts would focus more narrowly, on Brazil, the largest economy in Latin America. In addition to IMF aid for Brazil, there have been some discussions "about some swap line from the U.S. Fed similar to what they did for Mexico," said Petry, adding that he had spoken to people in Washington familiar with the work of Treasury and the Fed. Federal Reserve Bank of New York President William McDonough declined to comment on any broad emerging markets package on Tuesday while speaking in London. Talks about a Fed swap line are still preliminary and may not be announced if Brazil's fiscal situation improves, Petry said. But it could be quickly finalized in an emergency, he said. "There is enough evidence that the Fed is concerned about Brazil and its potential impact on U.S. banks," said Petry. Economists said part of the funds would likely come from the U.S. Treasury's Exchange Stabilization Fund (ESF), a credit facility geared to lend to foreign entities. John Welch, chief economist for Latin America at Paribas, said discussions in Washington point to a multilateral package that would be about $15 billion from the IMF in a stand-by facility and $10 billion from the World Bank and the Inter-American Development Bank (IADB). The Inter-American Development Bank has announced it will approve a $1.1 billion loan to Brazil on Wednesday, the largest loan it has ever issued. Brazilian government officials are giving a split message about financial assistance, U.S.-based economists said. In the domestic press, Brazilian officials have repeatedly emphasized they have not requested IMF money and a monetary official in Washington echoed that assertion on Tuesday. But at the same time, Brazil has told international investors that they have worked out informal arrangements for emergency financial aid with the IMF linked to fiscal reform. The actual timing of the formal request may then be a matter of political expediency, according to analysts. Market speculation has been rife about a large bail-out package for emerging markets put together by the Group of Seven countries. But U.S. economists said such speculation is more likely wishful thinking. Such a free-wheeling package has also been denied by top government officials in several counties, including the U.K., Germany and the United States. The UK Treasury on Tuesday said it was not aware of any such deal. Economists in the U.S. said Washington and multilateral agencies will limit any financial assistance program to Brazil, Latin America's largest economy and the linchpin for financial stability in that region. "It is a Brazil-specific package," said Petry at Citicorp. He pointed out that Argentina has, in fact, been looking to repay outstanding IMF arrears and is working toward financing with the World Bank, the IADB, the Import-Export Bank and local pension funds. Brazil's problems escalated this summer when a crisis in emerging markets triggered by a debt default in Russia prompted investors to flee Brazilian assets, citing Brazil's huge fiscal deficit and large domestic debt burden. After spending $20 billion in foreign exchange reserves to defend the real, Brazil turned to the IMF and other potential sources of finance. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8409)	9/22/1998 4:26:00 PM
From: Steve Fancy	Respond to of 22640

Standard & Poor's warns over Latin American banks Reuters, Tuesday, September 22, 1998 at 13:32 MEXICO CITY, Sept 22 (Reuters) - International rating agency Standard & Poor's said on Tuesday that spreading emerging market turmoil was heading toward Latin American banks and their finances could suffer. "While expectations vary by country, analysts are closely watching Brazilian banks for suggestions of how bad things may get in the region," Standard & Poor's said in a statement. "Banks throughout Latin America are beginning to feel the pain from high interest rates and volatile markets," said Standard & Poor's Ratings Service managing director Roger Taillon. Jitters about the financial health of emerging markets, which began in Asia, then moved to Russia, recently became focused on Latin American powerhouse Brazil and have forced interest rates up from Mexico City to Buenos Aires. The rating service said interest rate margins for banks in Brazil would probably not be squeezed too badly as most paper held by them was floating rate debt. However, customer borrowing costs will increase sharply and, combined with an economic slowdown, could lead to much higher levels of problem loans. "Those large Brazilian banks that successfully made the transition to a low inflation economy appear healthy but are the most likely to face a period of severe testing," Taillon said. Standard & Poor's noted that Mexican banks had not yet fully recovered from the 1995 peso crash and "hence are more vulnerable but remain supported by the government". The agency noted that Mexican banks had been hit hard by market volatility while "the current contraction in Mexico's macroeconomic variables can only post further problems to the banking system." Venezuelan banks were also vulnerable and their relatively low nonperforming loan ratios and high reserves are likely to change quickly amid the turbulence in world financial markets. "In Venezuela, the prospects for the banking system are bleak so long as the country's fundamentals remain poor," said Taillon. Standard & Poor's added that it believed banks in Colombia and Chile were entering this period of turbulence in relatively good positions. Argentine banks, too, were also believed to be in good shape but could be placed under severe pressure if the country has to take extraordinary measures to defend its currency. "This event would likely be triggered by a devaluation in Brazil's currency," it said. mexicocity.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8409)	9/22/1998 4:26:00 PM
From: djane	Respond to of 22640

9/14/98 Lehman report on TBR. $155/target; 1-Buy Rating. Entitled "Protected from Devaluation." $13.04 FY99 estimate, $88/share book value. At $57/share, 4.5 98 PE and 3.8 99 PE. Scheleien (analyst) says TBR is valued below replacement cost, stock price will tread water until 10/3/98 election and possible devaluation, and noted that TBR companies have low levels of debt. lehman.com P.S. Haven't been closely following the thread due to heavy workload. Will probably lurk for a couple months.

To: Steve Fancy who wrote (8409)	9/22/1998 4:28:00 PM
From: Steve Fancy	Respond to of 22640

Summers: Clinton Stressed Need For Quick Japanese Action Dow Jones Newswires WASHINGTON -- President Clinton and Japanese Prime Minister Keizo Obuchi apparently agreed in general on the need for Japan to undertake economic reforms, but when it came down to specifics, the two leaders made little progress. This view emerged from a briefing by senior administration officials who attended part of the talks in New York City between Clinton and Obuchi. The meetings, which included nearly an hour-long private session between Obuchi and Clinton, marked the first between the U.S. president and the new Japanese prime minister. One key area of disagreement is how Japan should tackle the issue of reforming its banking sector. Deputy Treasury Secretary Lawrence Summers said Clinton told Obuchi that using public funds to bolster failing banks was essential. However, in response to this view, Obuchi merely said efforts to pass legislation to boost the banking sector were 'complex.' Obuchi certainly gave Clinton no commitment on when such legislation would be passed. 'The president believes, and certainly we all believe, that the infusion of public money is essential to an effective solution of these (banking) problems. 'The prime minister made it clear they are working very hard on this legislation . . . there were a lot of moving pieces,' Summers said. Summers went on to say that Obuchi could not or would not make any commitments to Clinton on how the legislation will look when it is finally passed. Just hours before Obuchi arrived at the meeting, an agreement that he had hammered out with the opposition parties in Japan on banking reform unraveled. Summers also downplayed reports the Group of Seven industrialized nations are putting together some sort of rescue package for Brazil, but he added that the G-7 is watching financial developments in Latin America very carefully. 'I wouldn't want to put too much time in those particular kind of reports,' Summers said. 'There are always discussions of a variety of things but there are certainly no specific proposals that are about to come out,' Summers said. However, Summers immediately added the G-7 nations have held talks about Brazil's financial woes in particular and Latin America's in general. He added that G-7 officials have also held talks with the International Monetary Fund and with Brazilian authorities. Highlighting the White House's concerns about the financial pressures being placed on Brazil, Summers described the country as one which has made significant progress in reforming its economy but now has been hit with the fallout from the Asian financial crisis. 'They have made enormous progress in recent years both in stabilization and in opening up its economy,' Summers said. 'Clearly Brazil and other countries in Latin America are being hit with market judgments that have a lot to do with contagion,' Summers added. He added this is a factor that is weighing heavily in the minds of the G-7. Summers made his comments in New York where he was briefing reporters on the outcome of the bilateral meeting between President Clinton and Japanese Prime Minister Keizo Obuchi.

To: Steve Fancy who wrote (8409)	9/22/1998 4:28:00 PM
From: djane	Read Replies (1) \| Respond to of 22640

Fortune. Telebras Pieces Fetch High Prices [$154 Merrill target] pathfinder.com Update Edward A. Robinson The Brazilian government was the big winner when Telebras, the country's telephone company, was privatized and split into 12 new companies at the end of July. Bidders like MCI and Spain's Telefonica paid $19 billion for the "Baby Bras"--an enormous 64% premium over the government's asking price. "It was a tremendous success," says William Beavington, an analyst with Paribas. (The Telebras ADR, TBR, which trades on the NYSE, will be retired after the Baby Bras' own ADRs are listed this month.) Yet, given the recent whipsawing in the world's equity markets, investors appear to be in for some uneasy moments before they reap returns from the split. TBR rose $11, to close at $124 the day after the auction. But in the wake of the recent selloff on Wall Street, it plummeted to $96 as fortune went to press. "All the Latin telcos are getting beat up," says Ray Liguori, an analyst at Merrill Lynch. He expects the aggregate stock price of the Telebras pieces to rise to $154 in 12 months. Still, analysts remain bullish in the long term because of tremendous pent-up demand for phone service. Spain's Telefonica, which snatched up the most promising piece, Telesp Participacoes, the local phone company in Sao Paulo, stands to profit most. It already owns a string of telcos in Chile and Argentina. And in conjunction with foreign partners, it's expected to offer voice and data-service bundles to multinational business customers. Issue date: September 7, 1998