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

To: Steve Fancy who wrote (9743)	11/17/1998 5:34:00 PM
From: Steve Fancy	Respond to of 22640

Brazil cenbank to announce budget deficit data Reuters, Tuesday, November 17, 1998 at 13:41 BRASILIA, Nov 17 (Reuters) - Brazil's Central Bank was due to announce public sector budget deficit data for the January-August period at 1100 local/1300 GMT Wednesday, a Central Bank spokesman said. Between January and July, the nominal budget deficit stood at 7.02 percent of gross domestic product (GDP). The Central Bank recently stopped reporting the deficit over 12 months. The government last month announced a sweeping fiscal austerity drive to tackle the budget gap, considered the Achilles heel of Brazil's four-year economic recovery. The nominal budget deficit is forecast to narrow to 4.7 percent of GDP in 1999, according to official estimates, with an improvement in primary accounts due to offset the projected growth in net public sector debt. The Central Bank was also due to release monetary base details for the month of September. joelle.diderich@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9743)	11/17/1998 5:37:00 PM
From: Steve Fancy	Respond to of 22640

U.S. official sees Brazil Congress approving plan Reuters, Tuesday, November 17, 1998 at 13:56 BRASILIA, Nov 17 (Reuters) - A senior U.S. official said Tuesday he expected Brazil's Congress would approve a sweeping austerity plan that is key to the country's chances of surviving financial turmoil. "Brazil is serious about economic and structural reforms...and I come away more optimistic that the plan will pass significantly intact in very reasonable time periods," said Stuart Eizenstat, Undersecretary of State for Economic Affairs. Eizenstat was speaking to reporters after meeting with Brazilian political and congressional leaders. He said he hoped Brazil's Congress would pass most of the tax increases, spending cuts and other measures included in the austerity program by early 1999 and that the rest would be approved after a new Congress meets for the first time in February. "The economic health of the world significantly depends on the success that you have," said Eizenstat, who is also responsible for trade and agricultural issues at the State Department. He said the U.S. government's $5 billion contribution to an IMF-led $41.5 billion credit package for Brazil was "recognition of the importance of Brazil in fighting contagion" in global financial markets from Russia and Asia's economic crises. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9743)	11/17/1998 5:39:00 PM
From: Steve Fancy	Respond to of 22640

Malan says IMF sees rates below 20 pct by end 1999 Reuters, Tuesday, November 17, 1998 at 13:56 NEW YORK, Nov 17 (Reuters) - Brazil's Finance Minister Pedro Malan said that the International Monetary Fund (IMF) expects short term interest rates in Brazil to come down to below 20 percent by the end of 1999. He made the remarks at a press conference following a meeting with investors and analysts in New York earlier Tuesday. Malan made the comment in response to questions by reporters about comments made at that same conference by IMF first deputy managing director Stanley Fischer. "We assume interest rates to come down slowly to below 20 percent by the end-of-year," Fischer had told investors via teleconference. Malan said, "I don't think Stanley Fischer said it (interest rates) will be below 20 percent next month." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9743)	11/17/1998 5:41:00 PM
From: Steve Fancy	Respond to of 22640

Brazil forex markets show net dollar inflow Reuters, Tuesday, November 17, 1998 at 15:07 Traders said they could not pinpoint a reason for Tuesday's dollar entry -- which was expected to be the first net inflow since November 6 -- except that a big bank made a transaction worth of about $150 million. The inflow made the real firm against the dollar despite the Central Bank lowering of the real-dollar exchange rate earlier on Tuesday, traders said. The Bank lowered the mini-band in a regular auction to allow the real trade between 1.1865 and 1.1985 against the U.S. currency from a former band of 1.1855 and 1.1975. Tuesday's mini-band adjustment was the fourth so far this month and represented a depreciation of 0.08 percent from the former band. The Bank lowers the band about six times a month, aiming to depreciate the real by about 7.5 percent against the dollar each year. In the floating market, the real also firmed 0.04 percent against the dollar to 1.1975 while in the parallel market, the Brazilian currency ended unchanged at 1.240. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9743)	11/17/1998 5:43:00 PM
From: Steve Fancy	Respond to of 22640

Emerging bonds up on US rate cut, Brazil outlook Reuters, Tuesday, November 17, 1998 at 16:51 NEW YORK, Nov 17 (Reuters) - Emerging debt prices rose slightly on Tuesday after Brazilian officials pitched their economic program to Wall Street and a U.S. interest rate cut promised emerging economies greater access to capital, analysts said. Many in the audience of about 200 bankers and analysts who listened to the presentation by Brazilian Finance Minister Pedro Malan said confidence is growing in the government's ability to tackle its budget deficit. Financial markets rallied on the news, interpreting the Fed's move as proof that the central bank is serious about doing whatever necessary to keep the world's top economy on an even keel. Benchmark Brazil C bonds <BRAZILC=RR> ended up 3/8 to bid 64-1/8, Argentine PAR bonds <ARGPAR=RR> were up 3/8 to bid 70-7/8 and Mexico PAR bonds <MEXPAR=RR> were up 1/8 to bid 75-7/8. "The peak in prices for the day came in the wake of the rate cut in the middle of the afternoon," said Dan Peirce, head of emerging markets research at BancBoston Robertson Stephens. "The Fed is doing what it said it was going to do to ease conditions in the bond market, so I think emerging debt will stabilize and perhaps move up a little bit before the end of the year," Peirce said. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9743)	11/17/1998 5:46:00 PM
From: Steve Fancy	Respond to of 22640

Spain's Telefonica Sees 1998 Net Pft At ESP215B-220B Dow Jones Newswires MADRID -- Telecommunications giant Telefonica SA (TEF) said Tuesday it's forecasting net profit for 1998 of 215 billion pesetas (ESP) ($1=ESP141.35) to ESP220 billion. Telefonica added it's targeting 15% to 20% average weighted growth in net profit for the 1998 to 2001 period. Telefonica said it was releasing these forecasts ahead of its meeting with analysts which is slated for later this session. Telefonica said Monday it posted a net profit of ESP163.34 billion in the first nine-months of the year, up from ESP141.79 billion for the same period in 1997. In 1997 Telefonica posted a net profit of ESP190.06 billion. In a letter to Spain's regulatory commission, Telefonica added "The modification of the financial structure of operations in Brazil should lead to savings of $250 million within the next three years." Telefonica added it's estimating that the company's indebtedness ratio in 1999 should fall to below 45%, and in the fourth quarter of 1998 Telefonica will apportion ESP298 billion toward "future contingencies" relating to labor issues. Telefonica said that as of Oct. 31 almost 8,000 employees had decided to take early retirement, and sees around 9,300 employees taking this option by the end of 1998. Relating to its mobile telephone unit, Telefonica said its is forecasting it to post around ESP80 billion net profit for the year. -By Robert S. Duncan; 341-399-3055 Spain's former telecommunications monopoly, Telefonica SA is the dominant telecoms player in the country. The Spanish telecoms market will be fully liberalized on Dec. 1, 1998, opening Telefonica up to competition to outside participants who don't hold government licenses. Telefonica is one of the largest telecoms operators in Latin America. Its holdings include an indirect stake in Telefonica de Argentina SA and direct stakes in Cia. de Telefonos de Chile, Cia. Anonima Nacional Telefonos de Venezuela and Puerto Rico's long-distance service Telefonica Larga Distancia. Headquarters: Gran Via 28, 28013 Madrid, Spain Significant Developments: In July 1998, Telefonica emerged as one of the most aggressive bidders in the Brazilian government's auction of Telebras. Along with its associates, it was awarded controlling stakes in several fixed-line and cell-phone operators. In June 1998, Telefonica said it will propose using its reserves to carry out two capital increases of 20.5 million shares each, giving shareholders a total of two new share for every 50 held. In March and April 1998, Telefonica raised ESP427.03 billion through a discounted 1-for-11 share offer. It said it would spend the money in Brazil. In March 1998, Telefonica dropped "de Espana" from its name to reflect its status as a multinational company. Earlier in the same month, it signed a strategic alliance with WorldCom Inc. (WCOM) and MCI Communications Corp. (MCIC) of the U.S. Two days later, it announced another alliance with Portugal Telecom SA (PT). In November 1997, Telefonica formed Telefonica de Marruecos with local Moroccan affiliates. Earlier in the same month, Telefonica bought the remaining 24% of Telefonica Internacional, or TISA, from the government for 127 billion pesetas (ESP). In November, it forecast net profit for 1998 at ESP215 billion to ESP220 billion. All figures are in Spanish pesetas and are group earningsattributable to shareholders. 9Mos ended 9Mos ended FY ended FY ended 9/30/98 9/30/97 12/31/97 12/31/96 Net pft 163.34 bln 141.79 bln 190.06 bln 160.28 bln Op. pft 642.20 bln 566.50 bln 660.45 bln 575.97 bln Sales 2.148 tln 2.022 tln 2.363 tln 2.006 tln Annual div -- -- -- 89 EPS -- -- 202.31 170.61 Currency history (peseta vs. dollar) Madrid 9/30/98 9/30/97 12/31/97 12/31/96 fixing 142.04 148.72 152.38 121.28

To: Steve Fancy who wrote (9743)	11/17/1998 5:49:00 PM
From: Steve Fancy	Respond to of 22640

CORRECT: IMF Fischer Rate Reference Year End 1999, Not 1998 Dow Jones Newswires Even with conservative estimates, the interest rate could go down to 20% by year end of 1999 from its current level of about 40%, he said. (Brazilian Finance Minister Pedro Malan later clarified that Stanley Fischer's comments in an item that ran about 1651 GMT, "Malan/Brazil -2: Campaign To Convince Investors," that interest rates could go down to 20% by year end actually meant that rates could go down to that level by the end of 1999.)

To: Steve Fancy who wrote (9743)	11/17/1998 5:51:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil's Wire-Tapping Scandal May Undermine Fiscal Plans Dow Jones Newswires SAO PAULO (AP)--Allegations that two top Brazilian officials may have tried to influence the outcome of a phone company's privatization could throw a monkey wrench into the government's efforts to stabilize its ailing economy, analysts said Tuesday. The allegations involve Communications Minister Luiz Carlos Mendonca de Barros and Andre Lara Resende, president of Brazil's national development bank, or BNDES. Conversations, secretly recorded on the eve of last July's 22 billion-real (BRR)($1=BRR1.19) privatiaztion auction of federal telecommunications holding Telebras, apparently show Barros and Resende favoring a consortium of personal friends in its bid to purchase part of Telebras' operations. The two officials helped coordinate the privatization process. Since the tapes surfaced last week, the brewing scandal has been the top news story in Brazilian media. Veja magazine published excerpts of the taped conversations in this week's issue. It is unclear where the tapes came from or who made them. Both Barros and Resende have denied any wrongdoing. In fact, the consortium they allegedly favored lost the auction. But that hasn't stopped opposition politicians from calling for a full congressional investigation, which analysts say could divert attention away from the government's fiscal austerity measures designed to revive South America's largest economy. "The tapes reveal a promiscuous relationship between the government and investors," said Congressman Marcelo Deda, of the leftist Workers Party. "At this stage of the game a congressional investigation is morally irreversible." In late October, the Brazilian government unveiled a mix of tax increases and spending cuts in a bid to restore investor confidence in the country's beleaguered financial markets. Much of the fiscal plan, which aims to save around BRR28 billion in 1999, requires congressional approval. "The government's worst nightmare at the moment is a congressional probe into the tapes," said Alexandre Barros, a Brasilia-based political and business consultant. "It will draw attention away from the austerity measures and possibly weaken them." Some politicians, Barros said, will agree with the creation of a Congressional Inquiry Committee "so they can later indulge in some horse trading with the government." "They'll negotiate withdrawal of their support in exchange for approval of projects that can dilute the fiscal austerity package," he added. Political consultant Jose Luciano Dias said an investigation will give Congress a stronger hand when it votes on the austerity measures. "The President will become more dependent on the good will of Congress," he said. Aware of the danger, the government is marshaling its allies to delay a possible investigation, at least until after Congress approves the belt-tightening measures. "We cannot stray away from our main objective," said Congressman Jose Roberto Arruda. "We must prioritize the measures." The wiretapping case reveals something more than an attempt to influence the outcome of a privatization auction, said Miriam Leitao, an influential commentator on economic affairs. In a column published in Tuesday's O Globo edition, Leitao said that the tapes underscore a "basic error in the entire privatization program - government banks financing the purchase of its own companies." The use of public funds, made available at subsidized interest rates by the BNDES, hurts the economy and the privatization process, she said. Police are also looking into allegations that President Fernando Henrique Cardoso and three close allies stashed away $368 million in a Cayman Islands corporate account. The allegations emerged in documents sent to authorities over the weekend implicating Sao Paulo Gov. Mario Covas, Health Minister Jose Serra and ex-Communications Minister Sergio Motta, who died last April. It is unclear where the documents came from. The original documents have not been released; only copies have been seen. Unlike the wiretapping, the impact of these allegations is quickly fizzling out, said political consultant Jose Luciano Dias. "The documents are so grotesquely false that no one is giving them any credence at all," he said.

To: Steve Fancy who wrote (9743)	11/17/1998 5:57:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Is Firewall Against Intl Fincl Crisis - U.S. Official Dow Jones Newswires BRASILIA -- Brazil is a firewall for the world against an international economic crisis and faces an intense challenge in fighting off further turmoil, U.S. Under-Secretary of State Stuart Eizenstat said Tuesday. "Brazil is a wall of protection against the contagion that spread from Asia and Russia and the U.S. recognizes the intense challenge the country is undertaking in response to the crisis," Eizenstat said at a press conference In Brasilia at the start of a two-day visit. The Under-Secretary for Economic, Business and Agricultural Affairs is in Brazil to discuss trade, foreign investment and the global economic crisis with Brazilian government officials and businessmen. Following talks with Congress president Antonio Carlos Magalhaes and other legislators earlier Tuesday, Eizenstat said he "sensed a strong urgency to pass most of the measures that are needed before the end of the year". "I hope Brazil will continue to press forward with the necessary reforms," he told journalists. Congress this week starts to work on a full agenda that includes approval of several points of the fiscal stabilization plan, unveiled Oct. 28, and aiming to save 28 billion reals (BRR) ($1=BRR1.19) in 1999 alone. Enabling legislation for the landmark social security reform bill, passed earlier this month, and the approval of the revised 1999 budget, sliced BRR8.7 billion, also need to be voted on. All are conditions pledged by the Brazilian government and linked to the $41.5 billion multilateral preventive aid package for Brazil led by the International Monetary Fund and announced Friday. Eizenstat said the aid package is part of the U.S. effort and desire to see Brazil fighting financial contagion. "The fact that 20 countries are involved is an indication of the critical importance Brazil has in the eyes of the world," Eizenstat said. He stressed that the economic health of "not only Latin America, but (also) of the whole world" depends on the success of the Brazilian government's fiscal stabilization plan. Eizenstat further pledged that the U.S. "will continue to work with other nations and world organizations to support Brazil," adding that friendship between the U.S. and Brazil is "deeper, wider and broader than ever." "I hope we don't have to contemplate the hypothesis of Congress not approving this plan, but after my talks with congressional leaders I don't have any reason to believe in such a scenario," he said. The government official said that Foreign Affairs Minister Luiz Felipe Lampreia and Vice President Marco Maciel told him earlier Tuesday that Brazil doesn't contemplate adopting any protectionist measures. On the dispute with Brazil over steel imports, Eizenstat said the U.S. government had to enforce strict anti-dumping legislation, which, he said, was strictly in line with World Trade Organization rules. He said the dispute was "non-political" and the U.S attitude "totally transparant."