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

To: RockyBalboa who wrote (9894)	11/19/1998 4:57:00 PM
From: Steve Fancy	Respond to of 22640

Latin American domino will not fall - Camdessus Reuters, Thursday, November 19, 1998 at 00:03 PANAMA CITY, Nov 18 (Reuters) - A hefty aid package for Brazil and prudent policies by Latin American governments will be enough to shield the region from the global financial crisis, the head of the International Monetary Fund (IMF) said. "The Latin American domino will not fall," IMF Director Michel Camdessus told the Annual Assembly of the Federation of Latin American Banks, meeting in Panama on Wednesday. But he warned that his prediction implied "an absolute promise from your banks and your countries" to continue addressing the problems within Latin American economies that brought many of their Asian counterparts to their knees. On Friday the IMF announced a $41.5 billion loan package designed to protect Brazil from the global financial crisis by restoring stability and keeping a currency devaluation at bay. "Macroeconomic disorder, ... banks (with irregular practices) that don't register every name, and that which you call oligarchia -- what others call crony capitalism -- all of this must be corrected urgently," he said. "These three elements, which are behind the catastrophes in each of the (countries affected by the crisis), you have in your own countries," he added. Camdessus said a healthy economy required five basic measures: clear regulations, strict government management, cooperation from the private sector, open financial systems, and transparency in financial operations. He lauded Panama for its record of steady growth, low inflation and tight fiscal discipline, which is partially aided by its use of the U.S. dollar as its national currency. Latin American countries have battled to fortify their economies since the start of the crisis last year in an effort to ward off the kind of financial woes which crippled Asian countries and Russia in recent months. Copyright 1998, Reuters News Service

To: RockyBalboa who wrote (9894)	11/19/1998 4:58:00 PM
From: Steve Fancy	Respond to of 22640

Malan says no Brazil reserves used in Nov on real Reuters, Thursday, November 19, 1998 at 05:45 FRANKFURT, Nov 19 (Reuters) - Brazil has $42 billion in reserves available to defend its national currency, the real, but so far in November none has been used, said Brazil's finance minister and a central bank offical on Thursday. "We have around $42 billion in reserves available to continue defending the real," Demosthenes Madureira de Pinho Neto, the central bank's director of international affairs, told reporters. Brazil's finance minister Pedro Malan said that so far in November, none of the available reserves had been used. "In this sense, the worst has been overcome. But we do not underestimate the arduous journey ahead," Malan said. Both officials were speaking at a news conference in Frankfurt ahead of a presentation to German financial institutions and a meeting with European Central Bank President Wim Duisenberg and Bundesbank President Hans Tietmeyer.

To: RockyBalboa who wrote (9894)	11/19/1998 5:03:00 PM
From: Steve Fancy	Respond to of 22640

Brazil minister under fire over favoritism charges Reuters, Thursday, November 19, 1998 at 14:00 By William Schomberg BRASILIA, Nov 19 (Reuters) - Brazil's embattled Communications Minister Luiz Carlos Mendonca de Barros denied Thursday fresh suggestions he sought to influence the outcome of the privatization of telecommunications firm Telebras (SAO:TELB3). A magazine published new excerpts from taped telephone conversations in which the minister and other officials appeared to discuss ways of favoring a group in the sale of one of Telebras' subsidiaries in July. As investors worried about the chances of the case upsetting the government's drive to tackle an economic crisis, the minister told a Senate hearing the tape of the conversations had been edited to insinuate he was seeking to influence the outcome of the $19 billion privatization. "That is not true, that is a lie," the minister said in reference to the allegations of favoritism in the sale. He was summoned to address the Senate after Brazil's media last week published parts of illegally recorded telephone conversations between him, the president of Brazil's National Development Bank Andre Lara Resende and other officials. The conversations seemed to imply that the officials were seeking ways of ensuring a group led by local investment bank Banco Opportunity and including Telecom Italia (MILAN:TIT) won the bidding for a fixed-line company, Tele Norte Leste. In the end, the Opportunity-Telecom Italia group picked up another fixed-line company earlier in the auction, preventing it from bidding for Tele Norte Leste which went to an all-Brazillian group referred to by officials in the tapes as "the enemy." The incident has turned into a political scandal in Brazil, just as the government is seeking to tackle the country's worst economic crisis in years. Mendonca de Barros and Lara Resende have said they will not resign. Left-wing opposition parties are trying to muster support for a parliamentary inquiry, a prospect the government is keen to avoid to prevent delays in voting on a crucial austerity plan. Brazilian markets were glued to Mendonca de Barros' testimony. The Bovespa index of share prices in Sao Paulo fell over 1 percent as investors worried about the chances of the scandal deepening, but recovered as the Senate hearing progressed. So far, the case has not affected voting on the austerity plan. Late Wednesday, Congress approved two controversial presidential decrees included in the plan which seek to narrow the country's pension system deficit -- set to pass $35 billion in 1998 -- by more than $6 billion next year. There was, however, no sign that the case would go away. The new excerpts of the conversations, published in magazine Carta Capital Thursday, showed Mendonca de Barros apparently bragging about his ability to influence the Telebras privatization. "The deal is in our hands. You know why, Beto? We control the money, the group...We make those sorry groups here...Pio (Borges, BNDES vicepresident) puts them together and then knocks them down..." the minister was quoted as telling his brother, Jose Roberto Mendonca de Barros, also a senior government official. In another excerpt, the minister was quoted telling a top official from Banco Opportunity, who is a former BNDES president, how to bid in the auction for Tele Norte Leste. Mendonca de Barros spent much of the opening part of his Senate testimony explaining how the government had sought to ensure that at least two companies took part in the auction for Tele Norte Leste to maximize revenues from the sale. He also said all rules for the privatization of Telebras had been followed. william.schomberg@reuters.com)) Copyright 1998, Reuters News Service

To: RockyBalboa who wrote (9894)	11/19/1998 5:07:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil minister under fire over favoritism charges Reuters, Thursday, November 19, 1998 at 14:00 By William Schomberg BRASILIA, Nov 19 (Reuters) - Brazil's embattled Communications Minister Luiz Carlos Mendonca de Barros denied Thursday fresh suggestions he sought to influence the outcome of the privatization of telecommunications firm Telebras (SAO:TELB3). A magazine published new excerpts from taped telephone conversations in which the minister and other officials appeared to discuss ways of favoring a group in the sale of one of Telebras' subsidiaries in July. As investors worried about the chances of the case upsetting the government's drive to tackle an economic crisis, the minister told a Senate hearing the tape of the conversations had been edited to insinuate he was seeking to influence the outcome of the $19 billion privatization. "That is not true, that is a lie," the minister said in reference to the allegations of favoritism in the sale. He was summoned to address the Senate after Brazil's media last week published parts of illegally recorded telephone conversations between him, the president of Brazil's National Development Bank Andre Lara Resende and other officials. The conversations seemed to imply that the officials were seeking ways of ensuring a group led by local investment bank Banco Opportunity and including Telecom Italia (MILAN:TIT) won the bidding for a fixed-line company, Tele Norte Leste. In the end, the Opportunity-Telecom Italia group picked up another fixed-line company earlier in the auction, preventing it from bidding for Tele Norte Leste which went to an all-Brazillian group referred to by officials in the tapes as "the enemy." The incident has turned into a political scandal in Brazil, just as the government is seeking to tackle the country's worst economic crisis in years. Mendonca de Barros and Lara Resende have said they will not resign. Left-wing opposition parties are trying to muster support for a parliamentary inquiry, a prospect the government is keen to avoid to prevent delays in voting on a crucial austerity plan. Brazilian markets were glued to Mendonca de Barros' testimony. The Bovespa index of share prices in Sao Paulo fell over 1 percent as investors worried about the chances of the scandal deepening, but recovered as the Senate hearing progressed. So far, the case has not affected voting on the austerity plan. Late Wednesday, Congress approved two controversial presidential decrees included in the plan which seek to narrow the country's pension system deficit -- set to pass $35 billion in 1998 -- by more than $6 billion next year. There was, however, no sign that the case would go away. The new excerpts of the conversations, published in magazine Carta Capital Thursday, showed Mendonca de Barros apparently bragging about his ability to influence the Telebras privatization. "The deal is in our hands. You know why, Beto? We control the money, the group...We make those sorry groups here...Pio (Borges, BNDES vicepresident) puts them together and then knocks them down..." the minister was quoted as telling his brother, Jose Roberto Mendonca de Barros, also a senior government official. In another excerpt, the minister was quoted telling a top official from Banco Opportunity, who is a former BNDES president, how to bid in the auction for Tele Norte Leste. Mendonca de Barros spent much of the opening part of his Senate testimony explaining how the government had sought to ensure that at least two companies took part in the auction for Tele Norte Leste to maximize revenues from the sale. He also said all rules for the privatization of Telebras had been followed. william.schomberg@reuters.com)) Copyright 1998, Reuters News Service

To: RockyBalboa who wrote (9894)	11/19/1998 5:10:00 PM
From: Steve Fancy	Respond to of 22640

Brazil SEC sees no signs of favoritism in Telebras Reuters, Thursday, November 19, 1998 at 12:02 SAO PAULO, Nov 19 (Reuters) - Brazil's Securities and Exchange Commission, known as the CMV, said in a release Thursday that it has not detected any signs of insider trading or illegal activity leading up to the privatization of Telebras. "The CVM...closely followed all of the stages of the process of privatization of the Brazilian telecommunications sector, without having identified up until now any sign of illegal activities, including 'insider trading,'" the commission said. At the same time, Communications Minister Luiz Carlos Mendonca de Barros denied during his testimony in the Senate allegations that he manipulated the sale. Opposition lawmakers hope to start a legislative inquiry, which could force Congress to put off voting on long-awaited austerity measures. Local media reports cited alleged tape recordings of conversations between Mendonca de Barros and other officials implying they tried to influence the outcome of the July privatization. "Illegal means, including clandestine wiretaps, cannot serve as the foundation to initiate an investigation," the CVM said. Still the commission said it "will be analyzing the possible inappropriate use of privileged information in the market (insider trading) during the Telebras privatization process." Copyright 1998, Reuters News Service

To: RockyBalboa who wrote (9894)	11/19/1998 5:11:00 PM
From: Steve Fancy	Respond to of 22640

Brazil SEC sees no signs of favoritism in Telebras Reuters, Thursday, November 19, 1998 at 12:02 SAO PAULO, Nov 19 (Reuters) - Brazil's Securities and Exchange Commission, known as the CMV, said in a release Thursday that it has not detected any signs of insider trading or illegal activity leading up to the privatization of Telebras. "The CVM...closely followed all of the stages of the process of privatization of the Brazilian telecommunications sector, without having identified up until now any sign of illegal activities, including 'insider trading,'" the commission said. At the same time, Communications Minister Luiz Carlos Mendonca de Barros denied during his testimony in the Senate allegations that he manipulated the sale. Opposition lawmakers hope to start a legislative inquiry, which could force Congress to put off voting on long-awaited austerity measures. Local media reports cited alleged tape recordings of conversations between Mendonca de Barros and other officials implying they tried to influence the outcome of the July privatization. "Illegal means, including clandestine wiretaps, cannot serve as the foundation to initiate an investigation," the CVM said. Still the commission said it "will be analyzing the possible inappropriate use of privileged information in the market (insider trading) during the Telebras privatization process." Copyright 1998, Reuters News Service

To: RockyBalboa who wrote (9894)	11/19/1998 5:12:00 PM
From: Steve Fancy	Respond to of 22640

Brazil forex mkts lose $230 mln Thurs -- traders Reuters, Thursday, November 19, 1998 at 14:22 SAO PAULO, Nov 19 (Reuters) - Brazil lost about $230 million through foreign exchange markets Thursday, according to traders' preliminary estimates, and the currency closed little changed. In the commercial forex market, the real weakened 0.04 percent against the dollar to 1.1935 while it closed unchanged at 1.1990 reais to the dollar in the floating forex market. The currency was also unchanged in the parallel market, closing at 1.24 reais to the dollar. As of 5:00 p.m. local time (1400 EST/1900 GMT) Brazil had posted a net gain of $70 million through forex markets. But traders said that a number of small trades at the end of the day should result in a net outflow once all the receipts are tallied. Dollar outflows were expected to slow in November after the government announced an austerity plan to shore up its currency and received an international line of credit. Copyright 1998, Reuters News Service

To: RockyBalboa who wrote (9894)	11/19/1998 5:13:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares hit by profit-taking amid scandal Reuters, Thursday, November 19, 1998 at 16:42 SAO PAULO, Nov 19 (Reuters) - Brazilian shares slumped at the close on Thursday as profit-taking after several days of gains took hold amid a political scandal, traders said. The market had traded with an eye to the Senate testimony of Communications Minister Luiz Carlos Mendonca de Barros, who denied allegations he had sought to influence the outcome of the privatization of telecoms firm Telebras (SAO:TELB3). The Bovespa (INDEX:$BVSP.X) index of leading shares closed 2.68 percent lower at 8,318 points with 610 million reais volume. "The minister's deposition won't change the timetable of reforms in Congress, which is what is interesting to the market," an analyst said. Copyright 1998, Reuters News Service

To: RockyBalboa who wrote (9894)	11/19/1998 5:18:00 PM
From: Steve Fancy	Respond to of 22640

Emerging Mkts ADRs: Losing Steam After Initial Momentum Dow Jones Newswires NEW YORK -- Emerging market shares trading as American depositary receipts are coming back mid-morning Thursday from their opening strength, traders said. They added that macroeconomic news in Latin America and rallies in most underlying Asian markets set tone for initial trading in New York, which was then undermined by the lackluster performance of the Dow Jones Industrial Average. The DJIA was 15.19 points lower to 9025.92 at 1608 GMT. Traders said that Mexico benefited from Wednesday's release of gross domestic product figures that were significantly above expectations. But they agreed that ADRs were quickly losing steam. Mexico GDP grew 5.3% over the first nine months of the year. "Initially the momentum was on the GDP release, but the market is a little tired, and going forward, this was the last bit of good news," a dealer said. Blue chip Telmex was proving traders' lack of enthusiasm, slipping 0.5% to $50 3/8 at 1600 GMT. However, Banca Quadrum, a thinly traded financial company, was shooting up 18.4% to $3 5/8. Wednesday the company said it lost 13.9 million pesos (MXN) ($1=MXN9.9150) in the third quarter compared with a loss of MXN3.9 million. But more importantly to investors, Quadrum also announced it will spin off its railcar leasing unit, Ferroquadrum. In the case of Brazilian ADRs, the opening driver was news that Congress approved a proposal of the social security's reform, requiring contributions from until now exempt civil servants. "Even if the specific reform isn't that important, they're passing them," a trader said. However, market participants agreed that all good news are already out - $41.5 billion in multilateral aid, fiscal plan announcement - and now comes the tough part of implementing the vast and numerous reforms. At 1610 GMT, losers were outnumbering winners among Brazilian ADRs. The Telebras residual ADR was down 33% to 1/4, while HOLDRs barely kept above water, up 1/16 to $89 3/4. Among the few winners, Tele Nordeste Celular rose 7% to $11 1/2. Argentine Disco ADRs were slightly higher, up 1/8 to $20 11/16. Thursday the joint venture between Koninklijke Ahold NV (AHO) and Velox Investment Co. launched its expected tender for the 48% of Disco shares that it doesn't yet own, at $21 per ADR. Asian ADRs were experiencing the same gradual softening, after opening with a good bang, a dealer said. "They started strong, after a good night in the local markets. But the wind is coming out of everybody. They're coming off with the Dow." However, he said that in general terms, the market is very well bid. Telekomunikasi Indonesia rose 11.5% at 1620 GMT, while Taiwan Semiconductor advanced 7.8%. -By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com

To: RockyBalboa who wrote (9894)	11/19/1998 5:20:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Bans Telecom Italia From Tele Norte Leste Shares Dow Jones Newswires NEW YORK -- Brazilian telecommunications regulators said Thursday that Telecom Italia SpA (I.TLI) won't be allowed to bid for shares in local provider Tele Norte Leste Participacoes SA (TNE) owned by a government agency due to a conflict with Telecom Italia's stake in another fixed-wireline operator, the Estado news agency reported. A spokesman for Telecom Italia contacted by Dow Jones Newswires wasn't aware of the ruling. The Estado report said that Telecom Italia has made a formal offer of 1 billion reals (BRR) ($1=BRR1.19) for the 25% of Tele Norte Leste owned by Brazilian national development bank BNDES. Tele Norte Leste serves the Amazon and eastern regions of Brazil. Telecom Italia already controls Tele Centro Sul Participacoes SA (TCS), which provides service in the central and southwestern regions of Brazil. Both companies are spinoffs of former telecommunications holding Telecomunicacoes Brasileiras SA (TBR, TBH), and were privatized on July 29. In addition, both started trading American depositary receipts in New York on Monday. Tele Norte Leste is controlled by a consortium led by Brazilian conglomerate Andrade Gutierrez. Analysts point out that the company could benefit from a telecommunications operator among its shareholders.

To: RockyBalboa who wrote (9894)	11/19/1998 5:22:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Hosts Annual Latin American BIS Meeting Thu, Fri Dow Jones Newswires BRASILIA -- The Bank for International Settlement (BIS) annual itinerant meeting for Latin America started Thursday in Brasilia and will continue in Rio de Janeiro Friday, a central bank spokesman said Thursday. The meeting deals with monetary policy and is attended by monetary policy directors of Latin American central banks, he said. The spokesman couldn't confirm which countries are participating. He said Brazil's Central Bank president Gustavo Franco was attending the meeting as host. The regional BIS meeting is held each year in a different country on the continent. No statement was issued after the first meeting Thursday. -By William Vanvolsem; 5561 244 3095; wvanvolsem@ap.org

To: RockyBalboa who wrote (9894)	11/19/1998 5:24:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil's Rio Governor-Elect Says No New Debt Issues -Estado Dow Jones Newswires SAO PAULO -- In a possible show of support for the federal government's austerity plans, the newly-elected governor of Brazil's Rio de Janeiro said Thursday there is no chance the state will default on its debt with the federal government, the Estado news agency reported. At a conference to discuss fiscal reform, governor-elect Anthony Garotinho said that one of his first orders of business when he takes office in January will be to suspend the issue of state debt bonds, noting that his policy will be to retire debt "as much as possible." President Fernando Henrique Cardoso has placed much of the blame for Brazil's fiscal woes on states. A group of recalcitrant governors, with Garotinho at the head, has voiced opposition to federal efforts to reign in state spending. After he was elected last month, Garotinho, a member of a leftist labor party, said that states may need to renegotiate debt payment terms agreed to with the federal government over the past two years. States participating in the debt restructuring currently pay between 11% and 15% of revenues monthly to the federal government. Between 1996 and 1998, the federal government assumed state debts totaling over $60 billion, charging favorable interest rates of 6% and 7.5% a year. Rio's debt was transferred to the federal government in mid-1998 following almost two years of difficult negotiations. Garotinho said Rio de Janeiro will provide tax incentives to attract companies to the state, a practice frowned upon by the Cardoso administration. The government has condemned this so-called fiscal war, charging that the states have sacrificed significant potential revenues as a result of the practice. Garotinho said the state will develop an economic development program to attract company investments, with tax holidays of up to five years and low interest rates of 5%-6% after that. The governor-elect also said a final decision on the fate of state water utility Companhia Estadual de Aguas e Esgotos, or Cedae, will be made after he takes office. As reported, the company's privatization has been suspended several times due to an unclear definition of whether state or municipal governments own the concession in metropolitan Rio de Janeiro. Last week, the state government set a new auction date of Nov. 30. The minimum asking price will be 1 billion reals (BRR) ($1=BRR1.19), down from the original minimum bid of BRR4.88 billion. Cedae, the first major water utility scheduled to go on the auction block in Brazil, is the country's second largest water and sewage disposal company. Garotinho, in a departure from earlier statements, said Thursday he isn't planning to return already-privatized assets to state control. Rio de Janeiro is Brazil's third most populous state with 24 million inhabitants.

To: RockyBalboa who wrote (9894)	11/19/1998 5:29:00 PM
From: Steve Fancy	Respond to of 22640

New developments on tapping affair hit local stocks Although the testimony given by the Communications minister, Luiz Carlos Mendonça de Barros, before the Senate this morning was considered positive by market watchers, they still fear that new developments on the wired-tapping affair, such as those published by Carta Capital, a Brazilian weekly magazine, is doing nothing to lift overall sentiment. Before the testimony, market analysts believed the minister's testimony was key to the opening or not of a Congressional investigation on the allegedly accusations that he could have favored a consortium in the R$ 22bn privatization process of the country's telecommunications holding Telebrás on July 29. Carta Capital unveiled new transcripts of other recorded tapes on the tapping affair in which Brazilian top officials -- such as the Communications minister, Mendonça de Barros, and André Lara Resende, the president of the National Development Bank (BNDES) -- were allegedly caught favoring a consortium during the privatization process of Brazil's telecommunications holding Telebrás, see related story. During his testimony, Mendonça de Barros urged Senators and Brazilians in general to forgive him for the language he used in the tapes, but asked them to "pay close attention to what he was really trying to say". He claimed he was actually trying to increase the price of the country's telecommunications assets, consequently helping increase Brazil's reserves. However, the approval in Congress of fiscal adjustment related provisional measures, see related story, is counterbalancing as well as avoiding stocks to plunge further, analysts say. (By Paulo R. Monteiro Dias)

To: RockyBalboa who wrote (9894)	11/19/1998 5:31:00 PM
From: Steve Fancy	Respond to of 22640

Congress approves first fiscal adjustment related MP's São Paulo, 19 - The government succeeded to approve in Congress yesterday four of the main Provisional Measures (MP's) regulating the R$28bn fiscal stabilization program (PEF) proposed by the federal government. One of the measures approved regulates the Welfare bill reform. The MP uniforms the public servants Welfare regime and restricts the expenditures of the Union, states and municipalities with retirees to 12% of the net revenues. The second MP approved assures the Union R$ 4.5bn next year by increasing to 3% from 2% the so-called Cofins, which will be also charged from financial institutions from now on. Although companies will have to pay more with a higher Cofins, they will be able to receive back up to 1% of that amount through the Net Profit Social Contribution (CSLL). The legislators also approved the MP proposing the adoption of mechanisms allowing the Social Security National Institute (INSS) to receive Agrarian Debt Securities (TDA's) of lands either expropriated or purchased by Incra in debt payment operations. Finally, Congress approved the measure creating incentive for bigger companies to incorporate smaller ones. In the coming week, the House will vote on more controversial MP's, such as those regulating the Welfare contribution of public servants and retirees. (O Estado de S. Paulo/ Jornal da Tarde/ Folha de S.Paulo/ Jornal do Brasil/ O Globo. Edited by Sergio Caldas)