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

To: DMaA who wrote (8741)	10/2/1998 11:35:00 AM
From: Steve Fancy	Respond to of 22640

Rubin: Brazil Very Important To Regional Economy Dow Jones Newswires WASHINGTON -- Treasury Secretary Robert Rubin said Thursday evening Brazil is critical to the economic well-being of the region and the U.S. "As I have said before, Brazil is very important to the economic well-being of the region, the United States and all of us -- the international community -- are very much focused on seeing how we can be helpful," Rubin said. Rubin made the remarks in an interview on CNN's "Moneyline" program. The interview was taped earlier Thursday after Rubin's appearance at a conference on the Americas. With economic officials from the Group of Seven industrial nations and the International Monetary Fund gathered in Washington, remarks from Treasury officials have taken on added weight in recent days. Rubin said Brazilian officials have already stated their commitment to tighter budgets and reforming their public retirement system. While the most likely prospect for the U.S. economy ahead is solid growth and low inflation, Rubin said the recent crisis is affecting some sectors particularly hard. "The two most significant things that could happen in the world, in terms of our economic well-being, are, number one, for Japan to get back on track, because of the enormous importance that would have on the rest of the world, and secondly, something we can do, which is to provide funding for the International Monetary Fund," Rubin said. Rubin acknowledged the IMF needs to be more transparent, but came to its defense against critics, saying it has made the right choices in many of the countries it has helped. Asked about what changes might be needed after the near-collapse of the hedge fund Long-Term Capital Management L.P., Rubin said two areas need to be looked at: hedge funds themselves and "greater supervisory focus on proper and effective risk evaluation in credit extension" by banks. A hedge fund study is being prepared by the President's Working Group on Financial Markets, which includes Treasury, the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission. -By Jonathan Nicholson; 202-862-9255

To: DMaA who wrote (8741)	10/2/1998 11:37:00 AM
From: Steve Fancy	Respond to of 22640

Portugal Telecom To Buy Brazil Notes To Pay For Acquisitions Dow Jones Newswires LISBON -- Telecommunications company Portugal Telecom SA (PT) confirmed Friday that it will subscribe to $1.265 billion in U.S. dollar-denominated fixed rate notes issued by the Brazilian government, to be used in the future to pay for PT's acquisition of two companies in the Telebras (TBR) privatization. "With this operation, PT expects to offset the dilutive effect on earnings for the overall 1998/2000 period," PT said in a statement. PT said the notes carry an annual gross yield of 13.97%, or 11.875% net, and will reduce the financial costs of PT's investment in acquiring control of Telesp Celular and Telesp Fixa on July 29. The fixed-rate notes, issued by Brazil's state-run Banco Nacional de Desenvolvimento Economico e Social, or BNDES, are scheduled to be repaid in two equal amounts on August 4, 1999, and August 4, 2000, with PT having the option of earlier redemption if it decides to prepay its debt to BNDES. -By Erik T. Burns; 351-1-319-1863; eburns@ap.org

To: DMaA who wrote (8741)	10/2/1998 11:37:00 AM
From: Steve Fancy	Respond to of 22640

Spain's Telefonica Signs Parallel Debt Deal With Brazil Dow Jones Newswires MADRID -- Telecoms giant Telefonica SA (TEF) said Friday it's negotiated a parallel debt deal with the Brazilian government to offset its commitment to pay for its new acquisitions there. Parallel debt involves a debtor and a creditor negotiating a new agreement to mirror their existing debt. It changes the terms of the original agreement. Telefonica's partner in Brazil, Grupo Iberdrola, has already announced a similar agreement with the government. In August, the two companies bought into several Brazilian telecoms operators, paying 40% of the price in one downpayment. However, they agreed to pay the remaining 60% in August 1999 and August 2000. Since the sale, though, international confidence in Brazil has evaporated on fears that there will be a series of currency devaluations in Latin America. Like Iberdrola, Telefonica has negotiated a parallel debt deal with the Brazilian government to minimize the risk of currency devaluations. The telecoms company said in a press release that it will pay $2.35 billion for one-year and two-year bills which yield 13.97%. Once the bonds mature, Telefonica will use the money to pay its debt to the government. The deal gives the Brazilian government a much-needed injection of dollars and lets Telefonica offset its debt with a regular flow of dollars. -By Rupert Cocke; 34-91-399-3079; rcocke@ap.org Please disregard item "Spain's Telefonica Signs Parallel Debt Deal With Brazil," which moved around 0851 GMT. It was reported in full Thursday.

To: DMaA who wrote (8741)	10/2/1998 11:42:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Cardoso Is Fincl Markets' Candidate Of Choice By STEPHEN WISNEFSKI Dow Jones Newswires SAO PAULO -- Brazilians should elect President Fernando Henrique Cardoso to a second term in office in two days and global financial markets will breath a collective sigh of relief. But why is a former leftist-leaning sociology professor now the darling of Brazil's business community and considered the only person capable of pulling the country back from the brink of economic chaos? The quick answer: He's done it before. Cardoso, who holds a 2-1 lead over leftist challenger Luiz Inacio Lula da Silva, is recognized as the father of the economic stabilization program, known as the Real Plan. The ambitious plan cut inflation from over 2,400% in 1994 to under 1% in 1998 and gave the country unprecedented stability that brought foreign investors back to Brazil. The president introduced the plan in 1994 when he served as finance minister and has been unwavering in his commitment to protect the currency at all costs and spur economic growth. With Brazil currently mired in a crisis that has swallowed $25 billion in foreign reserves since the end of July and sapped investor confidence, analysts said that now more than ever the country needs the assurance of stability that Cardoso provides. "Our confidence in Cardoso is based on a proven track record," said Carlos Kawall, chief economist at Citibank in Sao Paulo. "Cardoso has a clear vision and his policies don't stray off track. They don't take the market by surprise." "It's incredible to see how far we've come," he added. "After so many years of mismanagement, it was key to have an economic team that plays by pre-determined rules." Analysts praised the Cardoso administration's stubborn insistence on not altering the country's long-standing exchange and monetary policies owing to market pressures. "The thing that investors look for is a consensus to follow a certain path," said Jim Barrineau, Latin America equities strategist for Salomon Smith Barney in New York. "Brazil seems to have built that consensus," he added, citing the government's commitment to reform and fiscal austerity. In an effort to restore investor confidence, Cardoso pledged last week to attack Brazil's massive public deficit - 7.3% of gross domestic product - through the implementation of a three-year fiscal adjustment plan. Market watchers agree that strong words such as these from someone like Cardoso are more than just pre-election posturing. "He talked about the Real Plan during the '94 campaign and proved that it was more than just election talk once he took office," said Silvio Camargo, head of foreign institutional equity sales for Sao Paulo's Banco Fator. Aside from his political talents, analysts attribute a large part of Cardoso's success to a competent team of economic advisors that have earned the respect of foreign governments and investors. "I can guarantee you that they have a great deal of credibility with investors in New York," said Barrineau. "They've been able to keep the currency from collapsing where other countries failed recently." Prior to the Cardoso administration, Brazil's top-level government posts weren't always assigned on the basis of qualifications for the job and cabinets rarely held together throughout a four-year term. Cardoso's core group of advisors carries heavyweight professional credentials and remained mostly unchanged in the first term, a trend expected to continue in a second term. Even the president's detractors recognize the value of the team Cardoso has assembled. "I don't think Cardoso's a savior," said Carlos Augusto Levorim, partner in charge of equities at Oryx Asset Management in Sao Paulo. "But he probably has the best economic team ever." While market watchers are convinced that, given the current crop of presidential contenders, Cardoso is the only person qualified to lead Brazil into the millennium, they also agree that he still has a lot to prove. Brazil's public deficit is spiraling out of control owing in large part to a bloated social security system and lack of control over the state governments. Fears of a recession loom following an economic slowdown in 1998 and unemployment is at its highest levels in 10 years. Analysts said that the days following the election will be key for Cardoso to solidify the trust of financial markets. "Cardoso has shown he lacks the will to make tough decisions during times of crisis," Levorim said. "He's done nothing concrete lately. He needs to push through reforms and announce fiscal measures as soon as possible." Cardoso's overarching goal, market watchers said, will be to consolidate an emerging paradigm shift among the general population and the Congress. "With Cardoso, we've see the beginning of a general understanding that economic stability is important, and that it requires sacrifices," said Citibank's Kawall. -By Stephen Wisnefski; (5511) 813-1988; swisnefski@ap.org

To: DMaA who wrote (8741)	10/2/1998 11:46:00 AM
From: Steve Fancy	Respond to of 22640

Shell, Enron Finalize $500M Brazil Power Project Deal Dow Jones Newswires LONDON -- Shell International Gas Ltd., part of the Royal Dutch/Shell group (U.RSH), and Enron International, a division of Enron Corp. (ENE) of the U.S., announced Friday finalization of a partnership deal to develop the Cuiaba Power Project in Brazil. The project comprises a gas-fired combined cycle power plant in Mato Grasso state and a 630 kilometer natural gas pipeline in Brazil and Bolivia to feed the plant. The project will be developed over three years, giving a final generating capacity of 480 megawatts. Shell said in a statement that the project's total value is around $500 million with Shell having an equity stake of 25% in the plant and 35% in the pipeline. The power plant company, Empresa Produtora de Energia will sell the electricity to Eletronorte under a long term sales agreement signed last November. The project provides a second pipeline outlet for Bolivian gas into Brazil in addition to the main line currently under construction in which Shell and Enron also have an interest.

To: DMaA who wrote (8741)	10/2/1998 11:47:00 AM
From: Steve Fancy	Respond to of 22640

Mussa: Value Of Brazil Real "An Issue" Dow Jones Newswires WASHINGTON -- Michael Mussa, director of research at the International Monetary Fund, said Friday he believes Brazil will be able to maintain the crawling peg of its currency, the real, to the U.S. dollar. However, he said he believed the current value of the real is "an issue." Economists have recently argued that the real is overvalued and that its peg to the dollar is unsustainable.