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

To: Steve Fancy who wrote (9416)	11/4/1998 4:04:00 PM
From: Steve Fancy	Read Replies (3) \| Respond to of 22640

Emerging market bonds firm with all eyes on Brazil Reuters, Wednesday, November 04, 1998 at 15:58 NEW YORK, Nov 4 (Reuters) - Emerging market bonds climbed on Wednesday amid expectations that Brazil's Congress will remove any remaining obstacles to a sweeping reform of the pension system in a vote later in the day, traders said. Brazil dollar-denominated bonds were half-a-point to one-and-a-half points higher Wednesday with the benchmark "C" bonds <BRAZILC=RR> rising half-a-point to 63, traders said. Meanwhile, the financial picture in Russia grew yet another shade darker Wednesday as the government admitted for the first time that the country may have to restructure foreign debt payments. First Deputy Prime Minister Yuri Maslyukov told reporters Russia's government may have difficulty meeting payments on external debt of about $3.5 billion this year and another $17.5 billion next year. "Both tasks are excessive for our weakened economy," he said. Russia restructured rouble-denominated domestic debt in the third week of August. That rescheduling resulted in millions of dollars in losses to a wide spectrum of Western investors. Russia's dollar debt is already trading at prices of less than $10, discounting for the possiblity of default. But some aggressive money managers bought Russian debt in the last few weeks, paying about $9 on every $100 on the hope of collecting the next three to four coupon payments and recovering their purchase price. If Russia goes ahead and restructures foreign debt, investors may not recover even that low purchase price for some time, traders and analysts said. "People who wanted to clip off a few coupons from Russian debt may have to wait for some time if the government restructures the debt," said Paul Dickson, emerging markets strategist at Lehman Brothers Inc. Russia's PRIN bonds <RUSPRIN=RR> were lower by half-a-point to bid at 7-1/2 later Wednesday. Meanwhile, the modest climb in emerging market bond prices was met with some selling by U.S. investors, traders said. "There's one asset manager who's been hitting three or four dealers at the same time. That's created some supply pressure," said a trader. Emerging market bond prices remain vulnerable to any upset in the scheduled vote in Brazil's Congress, traders said. The pension reform bill is seen as the essential first step in Brazil's efforts to cut a bloated public sector deficit. The bill is part of a broader plan to save $84 billion in public money over three years. The government of President Henrique Fernando Cardoso worked out the program in broad agreement with the International Monetary Fund. The IMF is working on a financial package for Brazil estimated at $30 billion to help the large Latin American economy overcome an economic and financial crisis made severe by Russia debt default earlier this summer. Copyright 1998, Reuters News Service