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

To: Steve Fancy who wrote (9611)	11/11/1998 5:50:00 PM
From: Steve Fancy	Read Replies (4) \| Respond to of 22640

Emerging debt slides, market awaits Brazil loan Reuters, Wednesday, November 11, 1998 at 17:28 By Hugh Bronstein NEW YORK, Nov 11 (Reuters) - While emerging debt traders took Wednesday off to mark the Veterans Day holiday, many Wall Street analysts stayed on the job, poised to react to an international bailout for Brazil, expected in the $30 billion to $45 billion range. Analysts expected an International Monetary Fund (IMF) letter of intent, specifying Brazil's economic targets, to be released as early as Wednesday evening. "If (the IMF-led bailout) is less than $30 billion, the market is going to be extraordinarily disappointed," said Joe Petry, chief economist for Latin America at Salomon Smith Barney. "If the total package is $35 billion, the market will be neutral and if the package totals $40 billion or more the market will be pleased." Amaury Bier, Finance Minister Pedro Malan's top aide, told Reuters that negotiators were still working on the letter of intent laying out Brazil's policy commitments. He said a final agreement with the International Monetary Fund should be ready by the end of this week. "If the letter of intent does not come out this week it will weigh on sentiment and I would expect emerging bond prices to sink a little lower," said Ronald Ratcliffe, chief Latin American economist at SG Cowen Securities Corp. But bond prices should move up on a carefully thought out letter of intent that provides strong backing for Brazil's recently-announced fiscal stabilization program, Ratcliffe said. Brazil is under pressure to close its gaping fiscal deficit through an austerity program now being negotiated in Congress. The outlook for Brazil's crisis-struck economy darkened further on Wednesday amid a barrage of statistics showing industry heading for its worst year since the days of rampant inflation. Brazil's government announced a 2.9 percent plunge in industry output in the third quarter of 1998 compared with the same period last year. The official National Statistics Institute also said production suffered its biggest month-on-month drop this year, 2.4 percent in September, when Brazil's financial crisis began, and would shrink by up to 1.5 percent in 1998 as a whole. Industrial output in annual terms last shrank in 1992, when the economy was mired in the chaos of multi-digit inflation. "We're going to see more bad numbers coming out in the near future and I think Brazil's total growth for 1998 could even be negative, which is worse than the market had been expecting," Ratcliffe said. Copyright 1998, Reuters News Service