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

To: Steve Fancy who wrote (8501)	9/24/1998 12:04:00 PM
From: MGV	Respond to of 22640

Brazil's Race against Time msnbc.com

To: Steve Fancy who wrote (8501)	9/24/1998 12:12:00 PM
From: MGV	Read Replies (1) \| Respond to of 22640

From the last article, if Cardoso does not win a 1st round victory, the election will not be resolved until 10/27. It would not matter that he would win in the 2nd round. The delay in policy implementation and the lack of a clear mandate after a 2nd round victory would be enough to punish TBR severely (read that mid 50s again) due to heightened risk of continued high rates causing severe recession next year or worse, a devaluation. The moral of the story: Root for a 1st round win if you are long TBR. Very significant piece of information from article: "Direct investors are still moving ahead in Brazil, where the consumer market is, by some measures, even bigger than China's."

To: Steve Fancy who wrote (8501)	9/24/1998 1:19:00 PM
From: Ganesh	Read Replies (1) \| Respond to of 22640

A word about hedge funds..... Oftentimes, hedge funds offer redemptions only once per year, at the end of the year, and must be warned of the redemption before the 31 November. Apparently LTCM only offers the possibility to exit 25% of your money per year over a four year period. The massive losses sustained in August and September (due to many things, most notably the emerging market mess, stock market losses, and simple bond and swap hedging activity against the bund future) have lost them all a tidy sum. Not to mention their European convergence trades in the bond market. LTCM is not alone, most hedge funds have been slammed recently. But there are also the major banks, the "privileged" trading partners of the hedge funds, who replicate the same positions in the market. As noted in the WSJ today, many other so-called hedge funds are seeing losses on a similar magnitude to LTCM. These hedge funds - the usual suspects - will undergo HUGE redemptions at the end of the year. If you were invested in one, would you support 50% + losses? Many hedge funds are supposed to be fairly "riskless" arbitrage investors, like LTCM. No one, of course can say for sure, because they remain completely secretive in their activities (unregulated by the SEC, of course). The problem is that volatility is chopping the true arbitrage shops to pieces. Those that call themselves arbitrage hedge funds are taking directional positions anyway, but as an investor, you would never know this. Everest Capital? Finished. Tiger Management? On the Ropes. Guess the rumors about Lehman Brothers' bankruptcy last week might have been true after all. Sic Transit Gloria Mundi. So what's my point? My point is that it is hedge funds and major banks that shorted TBR after the privatization. As they are forced to liquidate their positions when faced with redemptions (hedge funds) or cut trading limits (banks) they will be buying back TBR, in the same sizes that they sold it. Brokers will then get squeezed again, serving out millions of TBR stock to their desperate and gasping hedge fund clients. Then... We'll have less speculation against the Reale (and possibly buying of it in the liquidation of positions), and the shorts shaken out. Cardoso will win, drawing the support of the Brazilian domestic investor. Fed will cut next week. IMF support in exchange for simultaneous announcements of reform by Cardoso. So hang in there everyone. Ordem e Progreso. Um forte abracao a John Meriwether.

To: Steve Fancy who wrote (8501)	9/24/1998 2:07:00 PM
From: Steve Fancy	Respond to of 22640

Brazil to increase its World Bank stake Reuters, Thursday, September 24, 1998 at 12:38 BRASILIA, Sept 24 (Reuters) - Brazil's National Monetary Council (CMN), the country's highest monetary policy-setting organ, said Thursday it had approved raising Brazil's stake in the World Bank. The increase would take place through a selective capital increase, the CMN said in a statement. Officials were due to hold a news conference to explain the measure. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8501)	9/24/1998 2:09:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Thurs dlr flight seen down Reuters, Thursday, September 24, 1998 at 12:55 Portuguese utility EDP-Electricidade de Portugal (LIS:EDPP), which already put down part of its payment for the Banadeirante stake on Wednesday, was seen pouring in more money on Thursday, they said. EDP and its Brazilian partner VBC Energia bought 75 percent of the voting rights in Bandeirante for 1.014 billion reais ($859.3 million) last Thursday and EDP is expected to pay about $420 million. It already paid an estimated $140 million on Wednesday, dealers said. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8501)	9/24/1998 2:10:00 PM
From: Steve Fancy	Respond to of 22640

Brazil to set up financial institution controls Reuters, Thursday, September 24, 1998 at 13:00 BRASILIA, Sept 24 (Reuters) - Brazil's Monetary Council said Thursday it had approved the setting up of an internal system of controls for financial institutions. "The establishment of an internal system of controls...is imperative so that the inherent risks of financial and capital market operations can be adequately measured and managed," the Monetary Council said in a statement. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8501)	9/24/1998 2:20:00 PM
From: Steve Fancy	Respond to of 22640

S&P's Rating Services Opens New Sao Paulo Office Dow Jones Newswires NEW YORK -- Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies Inc., announced Thursday the opening of a new office in Sao Paulo. S&P said in a written statement that the office will provide analytical risk evaluation services for Brazilian issuers in global and local credit markets The new office complements S&P's existing cooperation agreement with Rio de Janeiro-based Fundacao Getulio Vargas (FGV). The S&P/FGV scale, launched in July, offers credit opinions on the relative creditworthiness of entities and specific real-denominated obligations in Brazil. S&P President Leo O'Neill said in the statement that "surging demand for independent, objective risk measures by Brazilian issuers and investors provides evidence of both a growing and dynamic Brazilian market and investor concern about the challenges facing emerging markets worldwide." "With this Sao Paulo office, we are demonstrating our long-term commitment to the Brazilian capital markets," O'Neill said, noting that the office will include Brazilian credit analysts with direct experience in local and international financial markets. S&P's Ratings Services operates through a global network of 20 offices, with 1,500 staff members in Argentina, Australia, Brazil, Canada, France, Germany, Hong Kong, Japan, Mexico, Singapore, Sweden, United Kingdom, and the United States, and affiliate offices in Chile, India, Indonesia, South Africa, and Taiwan.

To: Steve Fancy who wrote (8501)	9/24/1998 2:20:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's $1.1B Loan Unrelated To Crisis - IDB Official Dow Jones Newswires BRASILIA -- The $1.1 billion loan to Brazil which was announced by the Interamerican Development Bank (IDB) Wednesday, is unrelated to the current financial crisis or a possible international aid package for the country, an IDB official said Thursday. As reported, the IDB approved the loan as part of a total $3.3 billion package with equal contributions by Japan's Eximbank and Brazil's National Development Bank (BNDES). The loan will provide credit lines for small and midsized enterprises as well as finance various social projects. The IDB representative in Brazil, Jorge Elena, said the loan had been discussed since September last year "when obviously nobody knew the current crisis would develop the way it did". Elena added that the approval of the loan also wasn't speeded up in recent weeks because of the worsening crisis. "This loan, however, symbolically confirms the interest of the IDB in supporting, and continuing to support Brazil," he said. The IDB official referred in this respect also to a statement Wednesday by the bank's president, Enrique Iglesias, praising President Fernando Henrique Cardoso's undertaking earlier Wednesday to act tough on fiscal savings. Iglesias described Cardoso's speech as "an excellent message to the international financial community". Elena also said that the latest loan to Brazil was the first in a new approach which included "seeking strategic partnerships with renowned financial institutions for a continuous and systematic financing of viable projects". He said the IDB had so far lent $1.67 billion to Brazil this year. For the whole of 1998 the bank plans to approve a total of $6.7 billion in loans to Latin America, of which $2 billion to Brazil alone. -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (8501)	9/24/1998 2:24:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Ctrl Bk To Issue Note With Both Fixed,Floating Rate Dow Jones Newswires BRASILIA -- Brazil's Central Bank on Thursday announced it will sell a "hybrid" type of security that pays both fixed and floating rates, the Estado news agency reported. The fixed-rate part of new note, which will be called BBCA, will have a minimum maturity of seven days and maximum of 21 days. After that period, the note will pay the SELIC interbank interest rate - used for transactions backed by federal securities. Central Bank monetary policy director Francisco Lopes said that the BBCA allows the monetary authority to introduce fixed-rate notes without having to shorten maturities, Estado said. Lopes said he anticipates the National Treasury may develop a similar type of security. The Central Bank expects to hold the first BBCA auction next week.

To: Steve Fancy who wrote (8501)	9/24/1998 2:25:00 PM
From: Steve Fancy	Respond to of 22640

S&P Monitoring Emerging Mkt Financial Contingency Plans Dow Jones Newswires NEW YORK -- Standard & Poor's Thursday said that it is monitoring closely the financial contingency plans of policy makers in countries with significant cross-border borrowing needs over the coming year. Amid sharply deteriorating global financial conditions, these contingency plans will be key to determining credit quality, the ratings service said. "We believe that the policy reactions of emerging market governments, more so than any new IMF-led support packages, are key to their credit standing near term. So far, these policy measures have varied, as have the rating actions that Standard & Poor's has taken in response to them," said David Beers, managing director of the sovereign ratings group at S&P. The vulnerability of emerging market countries to funding difficulties varies, Beers said, adding "Governments with ongoing privatization programs and with access to established domestic capital markets, including comparatively strong local banks, will fare better than those without. In some cases, new IMF-led official financing packages, even of limited size, would help close financing gaps resulting from lower cross-border bond issuance. An even more critical issue, though, is whether governments implement timely tax increases and spending cuts to limit their external borrowing needs." S&P has taken rating actions affecting several emerging market governments over the past month. To date, credit ratings have been lowered for five sovereigns -- the Russian Federation, Hong Kong Special Administrative Region, the Federation of Malaysia, the Republic of Kazakhstan, and the Slovak Republic. Also, outlooks on the ratings on the Republic of Venezuela and the Federative Republic of Brazil have been changed to negative from stable. Most recently, S&P affirmed the ratings and stable outlooks on the Republic of Argentina and the Republic of Colombia. These rating actions reflect two factors. First is the substantial tightening in financial conditions affecting emerging market issuers during the past month. Second, and equally important, is that the response by a number of governments, so far, has fallen short of what is required to manage the crisis without a lasting impairment to their credit standing.

To: Steve Fancy who wrote (8501)	9/24/1998 2:26:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Qualcomm Performs Network Test Of IS-634 Interface In Brazil Dow Jones Newswires ORLANDO, Fla. -- Qualcomm Inc. (QCOM) completed a multi-vendor network test of the IS-634 open system radio-switch interface in Brazil. In a press release Thursday, Qualcomm said it performed the integration tests demonstrating the IS-634 interface with Japan's NEC Corp.'s (NIPNY) NEC do Brazil unit on Telebahia Celular's cdmaOne network in Salvador, Bahia. The companies peformed over 50 integration tests using NEC Corp.'s NEAX61 mobile switching center and Qualcomm's QCore 22 base station controllers and QCell base station equipment, the compoany said. The tests demonstrated integration of call processing, mobility management, supplementary services and hand-off functions on the network, Qualcomm added.