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

To: Steve Fancy who wrote (9241)	10/28/1998 5:12:00 PM
From: Steve Fancy	Respond to of 22640

IMF says Brazil fiscal plan "important progress" Reuters, Wednesday, October 28, 1998 at 13:09 WASHINGTON, Oct 28 (Reuters) - Brazil's $84 billion plan to rescue its ailing economy represents important progress in implementing a program of economic reform and stabilization, an International Monetary Fund spokesman said on Wednesday. The spokesman said both the IMF and "other members of the international community" would support the Brazilian reform program. He gave no figures for the size of a loan and no date for when the IMF board might meet to debate a lending program. "The fiscal plan unveiled today by the Brazilian authorities provides details on the structural reform and short-term measures that will be taken to achieve the targets that the Brazilian government had earlier announced and which have been supported by IMF management," he said. "They represent important progress in the implementation of Brazil's stabilization and reform program, which will be supported by the IMF and other members of the international community." Analysts expect the IMF to lead-manage a $30 billion rescue package for Brazil, the latest victim of turmoil sweeping world financial markets. The IMF could provide up to $15 billion of this money and the remainder is expected to come from other international financial institutions and from individual countries such as the United States. A Brazilian finance ministry official said on Wednesday that talks with the IMF would reopen in a few days. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:13:00 PM
From: Steve Fancy	Respond to of 22640

Brazil to cut 2.7 bln reais from state cos budget Reuters, Wednesday, October 28, 1998 at 13:42 SAO PAULO, Oct 28 (Reuters) - Brazil plans to cut 2.7 billion reais from the budget for federally owned companies over the next three years as part of its fiscal plan, the government said in a document published Wednesday. Finance Minister Pedro Malan presented the key points of a plan aimed at saving and raising a total 28 billion reais next year alone to reduce the budget deficit. State-owned companies will also be required by law to post a primary budget surplus of 3.6 billion reais as a group in 1999. State companies' results go into government accounts, creating either a surplus or a deficit. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:15:00 PM
From: Steve Fancy	Respond to of 22640

Brazil could secure IMF loan within month-official Reuters, Wednesday, October 28, 1998 at 13:48 BRASILIA, Oct 28 (Reuters) - Brazil could conclude within a month negotiations with the International Monetary Fund (IMF) over a multibillion-dollar loan, a senior Finance Ministry official said Wednesday. "We are in a position to conclude a deal with the IMF and the international community very rapidly. I don't think it will take a month. I think it's less than a month," the ministry's executive secretary Pedro Parente told reporters. The Brazilian government earlier announced a program of budget cuts, tax increases and other measures aimed at saving $23.5 billion in 1999 in an effort to restore investor confidence in its battered economy. carlos.dias@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:16:00 PM
From: Steve Fancy	Respond to of 22640

FOCUS-Brazil unveils austerity plan to save economy Reuters, Wednesday, October 28, 1998 at 13:52 (adds details of the plan, pvs RIO DE JANEIRO) By William Schomberg BRASILIA, Oct 28 (Reuters) - Brazil announced a long-awaited austerity plan on Wednesday to save $23.5 billion in 1999 via tax increases, budget cuts and other measures in a bid to pull Latin America's biggest economy back from the brink of collapse. The Finance Ministry issued a statement detailing a three-year program to tackle the country's huge budget deficit and qualify for an expected $30 billion in emergency credits from the International Monetary Fund and other lenders. "The challenge is before us," the statement said. "The current situation is one of unmistakable fiscal bankruptcy." Either Brazil balanced its accounts, "or it will be thrown to the fate of the economic climate, running extraordinary risks of losing everything we have achieved ... over the last four years." Brazil introduced an inflation-slashing economic stability plan in 1994 and by 1996 was the world's eighth biggest economy, according to the World Bank. Should it succumb to the kind of currency devaluation that has pummeled much of Asia and Russia, Latin America might be thrown into recession, slowing growth around the planet. Even if the plan works, Brazil faces a grim 1999. The ministry's statement said the economy would shrink by 1 percent next year, the first time the government has admitted the possibility of a recession. The measures listed on Wednesday included a previously announced $7.3 billion cut in the federal budget for 1999 and an increase in a financial transactions tax to 0.38 percent from 0.2 percent that is expected to raise more than $6 billion next year. Civil servants will have to contribute more to their pension plans and retired public sector workers will pay social security contributions for the first time. Other measures included the doubling of receipts earmarked by the constitution for states and municipalities but retained by the federal government. Finance Minister Pedro Malan was due to talk about the plan to reporters later on Wednesday. The plan, which was due to be sent to Congress for approval on Wednesday, is widely seen as President Fernando Henrique Cardoso's only chance of avoiding economic chaos. Despite his success in taming Brazil's once chaotic economy, Cardoso has failed to push essential structural reforms of the social security system and the civil service through the country's unpredictable Congress over the last four years. In a speech to the nation late on Tuesday, Cardoso said those reforms, plus an overhaul of the country's complicated tax system, were needed more urgently than ever before. "At this time when Brazil is stoutly confronting a serious international financial crisis, we must be united and think of the country's highest interests," the president said. "I appeal to Congress -- vote on the reforms and the fiscal stability program urgently," the president said. Cardoso met with political leaders earlier on Wednesday to plot out a strategy to rush the measures through parliament. Several senior politicians have already expressed opposition to cutting essential social spending while others have said they will seek to reduce the proposed tax increases. The president of Congress said on Wednesday he could not guarantee approval of the higher financial transaction tax. "(The government) wants 0.38 percent, but whether Congress will approve that or not, I can't guarantee," Sen. Antonio Carlos Magalhaes said. Opposition gains in Sunday's state gubernatorial elections have raised doubts about how much can be saved by cutting jobs at state-level. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:18:00 PM
From: Steve Fancy	Respond to of 22640

Brazil real stable amid $500 mln outflows-traders Reuters, Wednesday, October 28, 1998 at 14:52 SAO PAULO, Oct 28 (Reuters) - Brazil's currency was stable amid light trade on Wednesday as about $500 million left through foreign exchange markets which appeared to shrug off the fiscal plan presented by the government. Dollar flows were unaffected by the long-awaited measures as investors continued to yank cash out of Brazil to pay for maturing corporate bonds overseas. The currency was also unaffected, closing unchanged at 1.192 reais to the dollar in the commercial forex market. Finance Minister Pedro Malan presented a three-year fiscal plan aimed at reining in the budget deficit and paving the way for an international line of credit that could be used to shore up the currency. Some $30 billion fled Brazil in August and September after Russia's devaluation sparked a wave of capital flight. An interest hike and optimism over the pending international loan helped slow dollar flight in October, though maturing loans assured a lower, but steady outflow. As of 1700 local/1900 GMT, $253 million had left through the commercial forex markets, while another $61 million had left through the floating forex markets, traders said. The currency closed stable in the floating market at 1.194 reais to the dollar and unchanged in the parallel market at 1.27 to the dollar. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:18:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares sag at close, digesting fiscal plan Reuters, Wednesday, October 28, 1998 at 16:05 SAO PAULO, Oct 28 (Reuters) - Brazilian shares sagged at the close Wednesday as the market pondered whether or not Congress would approve a newly-announced fiscal austerity plan that earlier sent stocks up nearly 4 percent, traders said. "It's clear that people know that the economic team is not going to get sufficient support in Congress for the measures. The government pitched it hard with the increase of taxes and contributions," one trader said. Sao Paulo's Bovespa (INDEX:$BVSP.X) index of leading shares closed 0.62 percent lower at 6,827 points with a moderate volume of 583 million reais. The federal government earlier unveiled a long-awaited fiscal reform plan designed to shore up the economy and stave off speculative attack on Brazil's currency, the real. Analysts said the package as outlined by the government would stabilize Brazil's worrying fiscal situation and bring down its sizeable budget deficit. The question niggling markets now was how much of the plan would get through the notoriously cranky Congress. "They (government leaders) are clearly overshooting in order to get what they wanted, but it's going to be a tough negotiation," the trader said. Among blue chips, Telebras preferred receipts (SAO:RCTB40) ended down 1.9 percent at 87.80 reais after zooming up to 92.90 reais as the market first digested the fiscal plan. Traders said the market had been very volatile throughout the day and Petrobras preferred (SAO:PETR4) closed 1.39 percent higher at 146 reais, but off a high of 160. Eletrobras preferred (SAO:ELET6) ended 0.42 percent lower at 26.20 reais. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:24:00 PM
From: Steve Fancy	Respond to of 22640

U.S. MARKET NEWS from The Wall Street Journal Interactive Edition. Oct. 28, 1998 Stocks Advance As Brazil Worries Begin to Ease By DAVE PETTIT INTERACTIVE JOURNAL Stocks advanced on Wednesday as fears about troubles in Brazil receded and the Nasdaq Stock Market's high-flying technology issues continued to rally. Long-term Treasury bonds sank, while the dollar barely moved. The Dow Jones Industrial Average zigzagged throughout the day, dropping nearly 40 points its is low for the day, and climbing almost 70 points at best. A wave of selling sliced into the average's gains just before the close of trading, leaving it with a closing gain of just 5.93 to 8371.97. The Standard & Poor's 500-stock index added 2.79 to 1068.13, while the New York Stock Exchange Composite Index slipped 0.12 to 527.65. The Nasdaq market and its many big technology issues remained strong throughout the day. The Nasdaq Composite Index added 19.72, or 1.2%, to 1737.35, while a Morgan Stanley index of technology issues climbed 12.84, or 2.1%, to 612.55. Cummins Catherwood, of Rutherford, Brown & Catherwood, said developments in Brazil accounted for the markets many turns. Investors have been fearful about the outlook for the South American powerhouse's economy, and banks' big exposure to debts in that country. But a financial plan released by the country, and the absence of any hint it will devalue its currency, reassured investors. Bank stocks, battered on Tuesday amid rumors of a devaluation, posted solid gains. The Keefe Bruyette & Woods bank-stock index climbed 8.70, or 1.2%, to 714.89. The Brazilian government's plan, aimed at securing financing from the International Monetary Fund. The plan has three main elements: reducing government spending, narrowing the social-security deficit and boosting revenue. Long-term Treasury bonds sank after a report on durable-goods orders for September showed orders rose 0.9%, well above the consensus estimate of a 0.9% decline. Also, August orders were revised upward to an increase of 2.0% from the previously reported increase of 1.7%. Treasurys with shorter maturities, though, posted gains.

To: Steve Fancy who wrote (9241)	10/28/1998 5:26:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Higher CPMF Tax May Nudge Stock Trading To U.S. By MARGARITA PALATNIK Dow Jones Newswires NEW YORK -- Brazilian traders are bristling at one component of the government's fiscal package announced Wednesday: a doubling of a tax on financial transactions, known as CPMF. The tax rate is currently 0.20%, and if the government has its way, it will rise to 0.38%, bringing an additional 7 billion reals per year into state coffers. CPMF is charged on every financial transaction in Brazil, from writing a check to executing a foreign exchange transaction to trading a stock. Market participants agree that the tax - which is roughly ten times higher than the 3.5 basis points the Sao Paulo Stock Exchange charges per trade - will encourage a migration to New York trading in those companies which have American depositary receipts. Not surprisingly, those companies are Brazil's largest and most liquid. The increased levy - which requires congressional approval for implementation - will hit a Brazilian equity market that already this year has seen a fall of more than 60% in dedicated foreign money investing in the country's stocks. "Once again we're going to have less hot money," said a trader at brokerage Fleming-Graphus, in Rio de Janeiro. "The main way we used to work in Brazil was with quick positions, which now will move to ADRs." At FonteCindam in Sao Paulo, a trader concurred. "It's hard to calculate what's going to happen, but it's really bad in terms of liquidity," the trader said. "It will leave few things for us to trade, because the ADRs are much better for foreigners." The increase in the CPMF tax, when implemented, will likely hurt domestic brokerages more than large international firms with a presence in New York. Brazilian trading houses, which have been closing their New York offices in the past few months in an effort to cut costs, could find themselves isolated from those foreign clients who prefer to take advantage of New York's cheaper transaction costs. "This week as we were expecting the rise, we were thinking, 'How can we minimize the impact?'" said Jeremy Smith, head of Latin American securities trading for Deutsche Bank Securities in New York. "And the obvious answer is, you do as much as possible in New York. That's a no brainer." However, Smith and others agree that the tax shouldn't result in an overall contraction in volume traded for Brazilian equities. "In the context of this type of business and volatility, where markets routinely show 3% to 4% price variations, 18 additional basis points won't make people switch their screens off," Smith said. "What it does do, is once the decision is made to buy or sell, investors will look more carefully at which market to do it in." Although a rise in the CPMF tax was widely anticipated, market participants expected a more modest increase, to 0.30%. But traders Wednesday were clinging to the hope that once in Congress, the proposed tax gets tempered to 0.30%. "All the congressmen we've talked to say 30 basis points is acceptable, but 38 is too high," said a trader at Merrill Lynch in Sao Paulo. Lastly, most traders said they didn't place much faith in rumors circulating about a CPMF exemption for equity markets. -By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com

To: Steve Fancy who wrote (9241)	10/28/1998 5:29:00 PM
From: Steve Fancy	Respond to of 22640

Hey, Jeremy speaks again in this story... Brazil's Higher CPMF Tax May Nudge Stock Trading To U.S. By MARGARITA PALATNIK Dow Jones Newswires NEW YORK -- Brazilian traders are bristling at one component of the government's fiscal package announced Wednesday: a doubling of a tax on financial transactions, known as CPMF. The tax rate is currently 0.20%, and if the government has its way, it will rise to 0.38%, bringing an additional 7 billion reals per year into state coffers. CPMF is charged on every financial transaction in Brazil, from writing a check to executing a foreign exchange transaction to trading a stock. Market participants agree that the tax - which is roughly ten times higher than the 3.5 basis points the Sao Paulo Stock Exchange charges per trade - will encourage a migration to New York trading in those companies which have American depositary receipts. Not surprisingly, those companies are Brazil's largest and most liquid. The increased levy - which requires congressional approval for implementation - will hit a Brazilian equity market that already this year has seen a fall of more than 60% in dedicated foreign money investing in the country's stocks. "Once again we're going to have less hot money," said a trader at brokerage Fleming-Graphus, in Rio de Janeiro. "The main way we used to work in Brazil was with quick positions, which now will move to ADRs." At FonteCindam in Sao Paulo, a trader concurred. "It's hard to calculate what's going to happen, but it's really bad in terms of liquidity," the trader said. "It will leave few things for us to trade, because the ADRs are much better for foreigners." The increase in the CPMF tax, when implemented, will likely hurt domestic brokerages more than large international firms with a presence in New York. Brazilian trading houses, which have been closing their New York offices in the past few months in an effort to cut costs, could find themselves isolated from those foreign clients who prefer to take advantage of New York's cheaper transaction costs. "This week as we were expecting the rise, we were thinking, 'How can we minimize the impact?'" said Jeremy Smith, head of Latin American securities trading for Deutsche Bank Securities in New York. "And the obvious answer is, you do as much as possible in New York. That's a no brainer." However, Smith and others agree that the tax shouldn't result in an overall contraction in volume traded for Brazilian equities. "In the context of this type of business and volatility, where markets routinely show 3% to 4% price variations, 18 additional basis points won't make people switch their screens off," Smith said. "What it does do, is once the decision is made to buy or sell, investors will look more carefully at which market to do it in." Although a rise in the CPMF tax was widely anticipated, market participants expected a more modest increase, to 0.30%. But traders Wednesday were clinging to the hope that once in Congress, the proposed tax gets tempered to 0.30%. "All the congressmen we've talked to say 30 basis points is acceptable, but 38 is too high," said a trader at Merrill Lynch in Sao Paulo. Lastly, most traders said they didn't place much faith in rumors circulating about a CPMF exemption for equity markets. -By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com

To: Steve Fancy who wrote (9241)	10/28/1998 5:31:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Govt Sees Inflation Stable At 2% Next 3 Years Dow Jones Newswires BRASILIA -- Brazil should register a stable inflation figure of 2% from 1999 through 2001 and a decline in the gross domestic product of 1% next year, rising again to growth of 3% in 2000 and 4% in 2001, the government said Wednesday. In its written presentation of the fiscal emergency plan for 1999-2001, the finance ministry said that the "hypothetical inflation" for 1998 will be 1.5%, rising to 2% for the next three years. GDP growth for 1998 is projected at 0.5%. The statement also says that projections for revenue and expenses in federal accounts for the period 1999-2001 point to "a strong trend of a worsening of the primary result." "Combined with consequently continued high interest rates total public debt will become unsustainable," the government said in defending its fiscal adjustment plan for the next three years. In announcing the plan Wednesday, Finance Minister Pedro Malan said his target is a primary budget surplus of 23.7 billion reals (BRR) ($1=BRR1.19), or 2.6% of GDP, in 1999, BRR26.8 billion, or 2.8% of GDP, in 2000 and BRR30.4 billion, or 3% of GDP, in 2001. -By William Vanvolsem; 5561-244-3095;wvanvolsem@ap.org

To: Steve Fancy who wrote (9241)	10/28/1998 5:37:00 PM
From: Steve Fancy	Respond to of 22640

Brazil ADRs Tank In Late Trading; Large Brahma Cross-Trade Dow Jones Newswires NEW YORK -- Brazilian shares trading as American depositary receipts tanked in late trading, after following the Dow Jones Industrial Average most of the day, traders said. Market participants were at a loss to explain the steep fall in ADRs, which contrasted with a modest decline in the Sao Paulo exchange. They speculated that interventions by the Brazilian government to support the local stock exchange had back-fired, prompting heavy selling in New York once the Sao Paulo bourse closed. The Bovespa index closed down 0.63%, while ADRs of Telebras, the main component of the index, ended 6.5% lower at $69 5/16 in New York trading. Telebras HOLDRs slipped 7.1% to $69 9/16. The volume in both Telebras securities totaled an abundant six million ADRs. Traders said Goldman, Sachs had been a big seller of Brazilian issues throughout the day, lending a bearish tone to the session. Officials at Goldman were unavailable for comment. Beer-maker Brahma saw a huge surge in volume traded, with over 6.7 million ADRs exchanged, and closed 6% lower at $7 15/16. Traders said that Bear, Stearns had performed large cross-trades in the stock and couldn't provide further details. On the package of fiscal measures detailed by Brazilian authorities Wednesday, traders said they weren't surprised by the measures, which had leaked over the past weeks, but that the market still had a full plate of news to digest. "So many things were announced that everyone is trying to understand it," a trader said. -By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com

To: Steve Fancy who wrote (9241)	10/28/1998 5:39:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Fiscal Plan Faces Battle For Full Implementation By STEPHEN WISNEFSKI and MARA LEMOS Dow Jones Newswires SAO PAULO -- The Brazilian government has laid the plan on the table. Now it's Congress' turn to ensure that good intentions are turned into action. Brazilian Finance Minister Pedro Malan on Wednesday presented the details of a long-awaited fiscal stability program aimed at balancing public accounts and restoring investor confidence in the country's beleaguered markets. The plan, which seeks to save the government 28 billion (BRR) ($1=BRR1.18) in 1999 alone, includes a series of spending cuts and a number of controversial tax increases that will require Congressional approval. Malan said that over BRR15 billion of the 1999 savings are contingent on the approval of proposed reforms. "The mix of measures in the plan is generally good. The government seems committed to doing the right thing," said Tommy Takardi, a head trader at Sao Paulo's Banco Cidade. "But it's easy to announce it. There's a huge doubt concerning how the battle will go in Congress." While Malan said that he has the support of Congressional leaders, analysts agreed that the government may have to tone down some of its lofty revenue-generating targets during negotiations with Congress. "I doubt the government would put down on paper something it didn't know would be accepted by Congress," said Carlos Levorim, a director at Oryx Asset Management in Sao Paulo. "But it left plenty of room for negotiation," he added, citing the near-doubling of the CPMF financial transaction tax to 0.38% for 1999. Analysts expect this could be negotiated down to between 0.25% and 0.30%. The CPMF is one of the few measures directly impacting all segments of the population as it is levied on current account deposits and withdrawals, among other operations. Another measure expected to encounter ample opposition is the decision to require retired civil servants to pay 11% into their pensions, up from zero. Related to that, active government employees earning over BRR1,200 per month will pay 20%, up from the current 11%. Up until now, the government has steered clear of meddling with the privileges of public employees, who enjoy an almost sacred-cow status in Brazil. Analysts said, however, that the new tax rates set forth in the plan are no more than starting points for give-and-take bargaining that could last months. "We'll have some idea by the middle of November which measures have a chance of passing and which don't," Banco Cidade's Takardi said. "But we won't really know the impact of the plan for a long time." While analysts said they weren't surprised with what was unveiled Wednesday, the government's emphasis on taxes rather than spending cuts - only BRR8.7 billion will be trimmed in 1999 - is a double-edged sword. "In relying more on tax hikes and less on government spending cuts...the package isn't much different than so many others that have failed in the past," said Denisard Alves, an economist at the University of Sao Paulo. In addition to the tax increases, the government is pinning its hopes for the plan on the approval of other items that require Congressional approval, particularly the three outstanding points of a social security bill that has been delayed for four years. "I liked what they (the government) said about public social security problems. They were clear and open," said Oryx's Levorim. "But they may have to turn public opinion against certain members of Congress to get it passed." Malan said Wednesday that Congress is expected to begin final-round voting on the social security bill next week.

To: Steve Fancy who wrote (9241)	10/28/1998 5:43:00 PM
From: Steve Fancy	Respond to of 22640

After Brazil Fiscal Plan, Currency Mkts Await IMF By MICHAEL CASEY and MARIANNE SULLIVAN Dow Jones Newswires NEW YORK -- Currency traders are showing remarkable patience with Brazil, as is evident in the calm market reaction to the country's long-awaited fiscal austerity package Wednesday. The dollar, which is particularly vulnerable to potential turmoil in Latin America because of the exposure to the region of U.S. banks, hardly budged against the mark Wednesday when Finance Minister Pedro Malan detailed his plan to shave $28 billion reals off the budget. But the announcement is only the first part of the rescue deal on which the market is pinning its hopes. The second part, a forthcoming package of multilateral international financial assistance, is yet to be announced. "At this point the market wants to see the serious implementation of the (fiscal) plan. And there are two hurdles to this: its passage through congress and the freeing up of IMF (International Monetary Fund) assistance, " said Alex P. Beuzelin, market analyst at Ruesch International in Washington D.C. An IMF official said Wednesday the Fund supported the fiscal package and that along with the international community it would back Brazil. But no specific assistance deal was announced. The longer it is delayed, the more likely the market's patience is to run out, analysts say. When that happens, the U.S. currency could dive sharply from its current level over DEM1.6500. The question, however, is: how long is too long? There are plenty of reasons to suggest Brazil's financial markets have much life left in them yet. Firstly, although it lost more than $21 billion in outflows in September, the country had reserves of $45 billion as at the end of that month - far more than Russia held when it was forced to devalue the ruble in August. Secondly, the speculative hedge funds who might try to challenge the government's commitment to maintaining the value of its currency, the real, have themselves been wiped out by their massive losses on Russian investments. "Hedge funds have lost their bravado," said one analyst from a U.S. bank, who added that that has bought Brazilian President Fernando Henrique Cardoso some time. Thirdly, the market has shown a willingness to accept the political justification for delays. Just as currency traders had been prepared to wait until Brazilian gubernatorial elections had passed before Cardoso unveiled his fiscal plan, so they will accept political reasons for a delay from Washington, said Robert Sinche, currency strategist with Citibank in New York. Sinche notes that the Clinton Administration, which will not only contribute heavily to a financial rescue package but most likely coordinate the IMF's plan, will be unwilling to act until after U.S. Congressional elections on Nov. 3. "I just can't imagine that the Administration wants to come out and make an aggressive move using some funds from the financial stabilization fund right in front of mid-term elections," Sinche said. "I think the markets are just going to wait. They know what is afoot. They understand the political timetable." On the other hand, others feel time is running out and that postponement risks another run on Brazilian financial markets and a heavy hit to the dollar. They note the nervousness with which the market briefly sold dollars Tuesday when rumors of devaluation in the real circulated. "Any more delays and it looks like dithering," said Kevin Harris, international economist with MCM CurrencyWatch in New York. Brazilian President Fernando Henrique "Cardoso has done his bit. Now the IMF needs to go ahead and tell us what their package looks like."

To: Steve Fancy who wrote (9241)	10/28/1998 5:47:00 PM
From: Steve Fancy	Respond to of 22640

Emerging debt down on Brazil fiscal reform plan Reuters, Wednesday, October 28, 1998 at 17:24 NEW YORK, Oct 28 (Reuters) - Investors sold emerging markets debt, particularly shorter maturities, in the hours following the detailing of Brazil's $84 billion three-year plan to save its economy, traders and analysts said Wednesday. Investors were skeptical about the ability of President Fernando Henrique Cardoso to steer his reform program through Congress, U.S. market sources said. "The magnitude of the budget cuts Brazil announced is a little higher than what people were expecting, but the market is clearly not buying it," one emerging debt trader said. "The skepticism is being expressed at the short end of the yield curve," the trader said. The program of budget cuts, tax increases and other measures seeks to save $23.5 billion in 1999 and even more in 2000 and 2001, paving the way for an expected $30 billion in emergency credits from the International Monetary Fund and other lenders. Also central to the plan is completion of reforms to the country's social security and tax systems and civil service, which have languished in Congress for nearly four years. About a year ago, Brazil's government announced a similar but smaller austerity package. But analysts said that program was derailed by the temptation of the government to spend during an election year. The success of Brazil's austerity program will manifest itself in lower interest rates, said Dan Peirce, head of emerging markets research at BancBoston Securities Inc. So until rates fall in Brazil, Peirce said investors will remain wary of Latin American sovereign bonds. "We've always said that the local interest rates are a key component of bringing Brazil's fiscal picture back in line and local rates really have not moved much," Peirce said. Benchmark Brazil C bonds <BRAZILC=RR> were down 2-7/8 to bid 59-5/8, Argentine PAR bonds <ARGPAR=RR> were down 1 to bid 68-1/2 and Mexico PAR bonds <MEXPAR=RR> were down 7/8 to bid 74. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:49:00 PM
From: Steve Fancy	Respond to of 22640

Rubin welcomes Brazil plan,says implementation key Reuters, Wednesday, October 28, 1998 at 17:30 WASHINGTON, Oct 28 (Reuters) - U.S. Treasury Secretary Robert Rubin welcomed Brazil's new economic reform program on Wednesday and said the plan had to be implemented promptly. "It is essential that Brazil implement their program promptly and convincingly," Rubin said in a statement. He said the United States looked forward to "working with the international community" to support the economic program, but gave no information about the possible size of any U.S. loan. Rubin, repeating comments made earlier this week, said confidence and stability in Brazil were crucial to the United States, the Western Hemisphere and the rest of the world. "We look forward to working with the international community to support Brazil's economic program," he said. The International Monetary Fund is putting together a rescue package for Brazil, Latin America's largest economy and the latest victim of the world financial crisis. The deal is expected to be worth a total of $30 billion and analysts say it will probably include loans from the United States. Much of the money will be precautionary in nature, to be used only if Brazil's economic problems turn out to be deeper than currently expected. washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9241)	10/28/1998 5:51:00 PM
From: Steve Fancy	Read Replies (3) \| Respond to of 22640

Embratel Participacoes 3Q Loss R$1.06 A Thousand Shrs Dow Jones Newswires Embratel Participacoes S.A. - New York 3rd Quar Sept. 30: All figures in R$. 1998 1997 Revenue $1,098,000,000 .... Net income a (356,000,000) .... Avg shrs 334,399,000,000 .... Shr earns Net income a,b (1.06) c .... Figures in parentheses are losses. a. Includes charges of R$470 million related to the voluntary conversion of the company's pension plan from defined benefit to defined contribution, the initiation of an alternative retirement medical benefits plan and a voluntary severance plan expected to reduce headcount by about 1,000, or 10% of the work force. Also included in the charges are write-offs of investments in research and development and accelerated depreciation of outdated and redundant assets. Excluding charges, the company's third quarter earnings were about R$120 million. b. Earnings per thousand shares(R$). c. Not available. Embratel Participacoes S.A. said it restated latest second quarter earnings due to the new interconnection regime. The company said revenues and interconnection costs for the second quarter were adjusted upward to R$ 1.1 billion and R$ 550 million, respectively, and second quarter net income is R$ 116 million. Embratel Participacoes provides long distance and international telecommunications services in Latin America.