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

To: Tony van Werkhooven who wrote (11431)	1/12/1999 9:48:00 AM
From: Steve Fancy	Read Replies (4) \| Respond to of 22640

Brazil shrs drop on more worries about Minas debt Reuters, Tuesday, January 12, 1999 at 08:55 SAO PAULO, Jan 12 (Reuters) - Brazilian shares were sharply lower shortly after the opening on Tuesday as investor worries over Minas Gerais state's debt moratorium continued to roil markets, traders said. The Bovespa index (INDEX:$BVSP.X) of bluechip stocks dropped 3.43 percent to 6,184 points with the market's bellwether issue Telebras preferred receipt (SAO:RCTB40) losing 4.7 percent to 80.80 reais. At a little over 6,000 points, the Bovespa was at its lowest point since the beginning of October. Traders said dollar outflows from Brazil's foreign exchange markets, which were fueled by Minas Gerais' declaration of a 90-day debt moratorium, were also to be blamed for the equity market slump. Forex traders reported a net $187 million fled currency markets on Monday. Minas' governor Itamar Franco declared last Wednesday that he will temporarily cease payments on the state's $13.4 billion debt to the federal government. Copyright 1999, Reuters News Service

To: Tony van Werkhooven who wrote (11431)	1/12/1999 9:57:00 AM
From: Steve Fancy	Respond to of 22640

Brazilian Stocks Fall on Recession Seen Curbing Profits Brazilian Stocks Fall on Recession Seen Curbing Profits Sao Paulo, Jan. 12 (Bloomberg) -- Brazilian stocks fell for a fourth day, led down by phone companies, on concern that a weak economy and high interest rates may curb company profits this year. The benchmark Bovespa index fell as much as 2.8 percent to 6225, led lower by Petroleo Brasileiro SA and Telecomuniacoes de S.Paulo SA. In Chile, the IPSA Benchmark index fell 1.1 percent to 96.12 points, led lower by Laboratorio Chile SA, falling as much as 0.9 percent to 3 pesos. The Brazilian economy is expected to slip into a recession this year as interest rates of 29 percent curb spending and investment. A debt moratorium declared by Brazil's second most populous state of Minas Gerais is expected to make interest rate cuts unlikely, also slowing the pace of economic activity. ''There are a lot of stock bargains waiting to be bought,'' said Helio Ozaki, who manages $10 million in equities at Finambras Brokerage. ''But with all these economic and political uncertainty, investors are simply not willing to spend.'' Telesp, which is currently trading at 7 times 1998 earnings, fell 3.5 percent to 137 reais and Petrobras, trading at 11.5 times 1998 earnings, fell as much as 3.6 percent to 121 reais. Last week, Minas Gerais, Brazil's second most populous state, said it couldn't make payments for 90 days on the $15 billion debt it owes the federal government. A meeting with other states' governors is scheduled for next week to decide whether states such as Rio de Janeiro, Rio Grande do Sul and Mato Grosso, could follow suit, which would undermine Brazil's attempts to cut its budget deficit. The move is likely to diminish the chances of a cut on the country's benchmark interest rates -- which now stand at about 29 percent a year -- at the next central bank's monetary policy committee meeting Jan. 27. Brazilian interest rates are the highest in the world, after inflation is discounted, according to a study by Placas do Parana, a Brazilian company linked to France's Louis Dreyfus Finance BQ, Gazeta Mercantil newspaper reported. The study show Brazil's short term lending rate, discounted against inflation over the past 12 months, was 26.9 percent per year in December. The next highest is Colombia, with an annual rate of 16 percent. Brazilian benchmark ''C'' Bond rose as much as 0.2 percent to 56.43, during early trading. Brazilian stocks trading in Europe fell, led by Centrais Energeticas de Minas Gerais fell as much as 11 percent to 14.10 euros, while Telecomunicacoes Brasileiras SA, declined as much as 2.8 percent to 61 euros. -------------------------------------------------------------------------------- © Copyright 1998, Bloomberg L.P. All Rights Reserved. latinvestor.com

To: Tony van Werkhooven who wrote (11431)	1/12/1999 10:00:00 AM
From: Steve Fancy	Respond to of 22640

Brazilian Governors Meet to Show Support for Cardoso in Debt Dispute Brazil Governors Meet Over Dispute With Brasilia (Update1) (Updates to add quote from fund manager and political analyst and background; rewrites) Sao Luis, Brazil, Jan. 12 (Bloomberg) -- The governors of 18 small Brazilian states will meet today in northern Brazil to discuss a debt dispute with the central government, as stocks and bonds plunge on concern that Brasilia may give in to state demands for better financing terms. The state governors said they're meeting to show support for President Fernando Henrique Cardoso and don't plan to withhold debt payments to the central government. Yet investors are concerned the federal government may offer better finance terms to end a dispute with the states, undermining Brazil's efforts to slash its own budget deficit and ease interest rates. These concerns have sent the benchmark stock index down 18 percent in the last four days alone, making Brazil the worst performing market in the world this year. ''This kind of solidarity never comes for free,'' said Carlos Lopes, political analyst at SantaFe Ideias consulting firm in Brasilia. ''They will ask for congress to approve (austerity) measures faster but they will also want to see relief for economic recession.'' Maranhao state Gov. Roseana Sarney told Globo Television this morning the smaller 18 states would like to see easier credit terms on their debt with the federal government, but don't plan to demand changes or withhold payments to the federal government. ''It will be a demonstration from governors that they support Brazil and its attempt at fiscal adjustment,'' Maranhao This afternoon's meeting comes a day after the federal government withheld tax payments to Minas Gerais, after the state declared a debt moratorium. Minas Gerais, the second largest state, and other opposition- led states, want better financing terms to ease debt payments. ''It's good that there is support for Cardoso, but the government and states must show they will carry out the fiscal adjustment, something they should have done five years ago,'' said Flavio Menezes who manages $200 million in equities at Banco Patrimonio de Investimentos in Sao Paulo. Cardoso has indicated he'd meet with state leaders but won't alter the terms of the debt agreements, which many states signed last year. So far, none of the other 25 states has said it will follow Minas Gerais lead by imposing a debt moratorium. Though several large states, such as Rio de Janeiro, the third most populous state, and Rio Grande do Sul, have said they want to negotiate better terms with the federal government. Sarney, the daughter of former president Jose Sarney who defaulted on Brazil's foreign debt in 1987, criticized the 90-day moratorium declared by the Gov. Itamar Franco of Minas Gerais on its $15 billion debt. She also said other states shouldn't seek to renegotiate terms for their debts accords before cutting spending in their states. ''They should have studied ways to balance their states' accounts before protesting against the government,'' she said. Many states, which agreed to pay between 11 percent and 15 percent of their monthly tax revenue to the central government, say they have no money to meet debt obligations. The total state debt is worth about 100 billion reais, with states paying about 6 percent to 8 percent interest on the debt, well down from current benchmark rates of 29 percent. Governors today are expected to demand lower interest rates from the central bank and measures to boost the economy, analysts said. Large states such as Rio de Grande do Sul and Rio de Janeiro which won't be at the meeting because they are governed by opposition parties. The position of states like Rio de Janeiro, whose debt sum to over 20 billion reais and Rio Grande Sul, which owes the government 10.7 billion reais, will likely be decided at a meeting on Jan. 18. These states account for about a third of all states debt. Sao Paulo, the largest state and responsible for about half the states' 100 billion reais total debt owed the central government, has said it will honor its payments and won't demand new credit terms. -------------------------------------------------------------------------------- © Copyright 1998, Bloomberg L.P. All Rights Reserved. latinvestor.com