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

To: Steve Fancy who wrote (11449)	1/12/1999 1:33:00 PM
From: Steve Fancy	Respond to of 22640

Rubin says Brazil's Cardoso committed to reform Reuters, Tuesday, January 12, 1999 at 10:45 WASHINGTON, Jan 12 (Reuters) - Brazilian President Fernando Henrique Cardoso is committed to his program of economic reforms, U.S. Treasury Secretary Robert Rubin said on Tuesday. "Cardoso is absolutely committed to doing what needs to be done and he has the support of the global community," Rubin told reporters after a meeting with Argentine President Carlos Menem. The meeting was also attended by leaders of international lending institutions. Inter-American Development Bank President Enrique Iglesias said Brazil had been a topic of discussion. Iglesias said he did not believe that problems caused by a debt moratorium by a major state would be lasting. "It will settle," he said. The governor of the state of Minas Gerais said last week he would cease to make payments for three months on the $13.4 billion the state owes the federal government. Cardoso, reelected last year, has said Brazil will honor its debts. Concern about the moratorium has driven Brazilian share prices lower. Prices tumbled 7.6 percent in morning trade after falling 5.6 percent on Monday. 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (11449)	1/12/1999 1:36:00 PM
From: Steve Fancy	Respond to of 22640

Moody's affirms Brazilian State of Minas Gerais Reuters, Tuesday, January 12, 1999 at 10:57 (Press release provided by Moody's Investors Service) NEW YORK, Jan 12 - Moody's Investors Service confirmed the B3 foreign currency rating of the Brazilian state of Minas Gerais. Following the announcement last week of the state's moratorium on domestic debt owed to the federal government, statements have been issued that cast doubt on the state meeting its obligations on eurobonds coming due this February. The rating confirmation is based on Moody's opinion that Brazil's federal government will make every effort to ensure full and timely payment on the eurobonds issued by Minas Gerais. Moody's pointed out that the state's B3 rating remains one notch lower than Brazil's foreign currency country ceiling of B2 and lower than other Brazilian subnational governments rated by Moody's, to reflect Minas Gerais' relatively weaker credit fundamentals. Moody's noted that it had highlighted the potential for obstacles to state government reform in a number of reports released late last year (Special Comment on Brazil dated October 1998, reports on individual states in December 1998). In those reports Moody's stated that the various fiscal adjustment programs to improve the state governments' fiscal and debt position would likely be challenged by the slow pace of implementing federal laws necessary for reform and the need for a strong political will on the part of subnational governments to implement the reforms. Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (11449)	1/12/1999 1:41:00 PM
From: Telemarker	Read Replies (3) \| Respond to of 22640

Hello Steve. Have been following you on this thread on and off for what seems like forever. Thanks for all of your work and input. After having bailed out of my Brazilian equity positions early last fall, its looking to me like opportunity may be knocking again. I'm also interested in establishing a position in UBB as well. Do you have a view on selling the Feb. 10 Put, currently trading at around 1 1/2? Do you have a worst case scenario in mind for Brazil and its equity market this year? Finally, is there presently an asset play on TBR - the stub ADR? Thanks in advance.

To: Steve Fancy who wrote (11449)	1/12/1999 1:45:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Budget Gap Seen Wider in October on High Rates: Bloomberg Survey Brazil's Budget Deficit Widens in October: Bloomberg Survey Brasilia, Brazil, Jan. 12 (Bloomberg) -- Brazil's budget shortfall probably rose to 9.7 billion reais ($8 billion) in October because of lower tax revenue and record monthly interest payments after the government raised rates to bolster its currency. Brazil's budget deficit probably reached 9.7 billion reais in October from 9.6 billion reais in September, according to a Bloomberg News survey of six economists at Brazilian banks and consulting firms. ''The interest rate increase, which continued in October from September, was the single most important factor responsible for the increase in the deficit,'' said Antonio Madeira, economist at MCM Consultores in Sao Paulo. Since 60 percent of the country's domestic debt is indexed to overnight lending rates, interest payments rose immediately as market rates doubled to almost 50 percent after the central bank raised rates to stop an outflow of U.S. dollars that had reached $1 billion daily. High interest rates and bloated pension and payroll bills have caused Brazil's budget deficit to balloon in the past year, raising investors' concern that Brazil may find it difficult to refinance its 300 billion reais domestic debt. A debt moratorium by the state of Minas Gerais has exacerbated these concerns, undermining Brazil's ability to cut spending and raise taxes to slash its $64 billion budget deficit. The increase in interest rates, which were in effect all through October, also had an effect in the government's tax revenue. As economic activity declined, so did the government's collection of service and financial transaction taxes. Economists expect that the country will slip into a recession this year, with private forecasters projecting a contraction of 2 percent to 4.3 percent, so tax revenue may decline even further. In the 12 months ending in October, the deficit may have reached about 76 billion reais, or 8.4 percent of gross domestic product, economists said. That number is higher than the 8.1 percent of GDP estimate for year end from the Brazilian government and International Monetary Fund. Brazil has pledged to reduce its budget deficit almost in half this year, to a level equal to 4.7 percent of GDP this year, as condition for the $41.5 billion aid package from the IMF and other international lenders. Brazil's central bank is expected to announce official figures this week. Following are estimates by economists surveyed by Bloomberg News: Monthly Deficit 12-month in Deficit as in Bln reais Bln reais % of GDP -------------------------------------------------------------------------------- © Copyright 1998, Bloomberg L.P. All Rights Reserved. latinvestor.com

To: Steve Fancy who wrote (11449)	1/12/1999 1:48:00 PM
From: Steve Fancy	Respond to of 22640

Brazilian Currency Weakens, Investors Avoid Long-Term Real Contract Brazilian Currency Weakens, Investors Avoid Long-Term Contract (Updates to rewrite throughout, includes more money market trader comments and refresh prices.) Sao Paulo, Jan. 12 (Bloomberg) -- Brazilian investors refused to trade long-term futures contracts on the real, concerned Brazil may be forced to weaken the currency to ease interest rates and stem capital flight. ''Things are not good at all,'' said Alexandre Horstmann, a money market trader at Banco Marka SA in Rio de Janeiro. ''Rates soared and nobody wants to trade the real. Investors are afraid Brazil simply won't meet all its commitments with the IMF.'' In Brazil's futures market, which normally trades currency contracts of up to two or three months, there were no takers on the contract that expires in April. This underscores the growing concern about Brazil's ability to protect the currency, as rates soar, stocks tumble and investors pull money out of the country. The foreign exchange contract for February and March delivery, the only two contracts traded today, rose. The February contract rose to 1.222.5 reais against the dollar, from 1.222 yesterday, while the March contract rose to 1.2395, from 1.2385. The April contract traded Monday at 1.258 to the dollar. The real trades within a narrow trading band set by the central bank. The bank is expected in the next few weeks to make its periodic adjustment to the band, as the currency, which traded today at 1.211 to the dollar, is close to the ceiling of 1.22 reais to the dollar. The band was last adjusted Jan. 19 of last year. This has prompted speculation the government may adjust its currency system, opting for a wider trading band, allowing for a freer float of the real, or pegging the currency to the dollar, perhaps through a currency board. This would allow Brazil to bring down interest rates -- now among the highest in the world at 29 percent after inflation -- which are choking the economy. ''The worry is that if the government can't manage to contain this break with expected interest rate trends, it will have to take some more drastic action,'' such as a weaker currency, said Sergio Machado, money market trader at Banco Fator. Rates Climbing Interest rates soared, on concern a debt dispute between the central government and several state government may undermine Brazil's ability to slash its budget deficit and bring down rates. The benchmark stock index fell 8.3 percent. The rate on one-day certificates of deposit for March delivery, the most actively traded interest rate futures contract on Sao Paulo's BM&F commodities and futures exchange, soared 522 basis points to 37.46 percent, the highest level since last October, when rates were traded at 39 percent. The contract reflects interest rate expectations for March, and indicates investors don't expect Brazil to reduce rates anytime soon. Last week, Minas Gerais state said it ran out of cash and won't make payments for at least three months on the 18.5 billion reais ($15.3 billion) of debt it owes the central government. If Minas Gerais doesn't pay its debt, other states may follow suit, threatening the country's efforts to cut by almost half its $64 billion budget deficit this year and meet its commitments with the International Monetary Fund. ''Rates won't come down until investors know for sure the states will meet their debt obligation with the federal government,'' said Mauricio Zanella, a money market trader at Lloyds Bank Plc. Elsewhere in the markets, the rate on one-day certificates of deposit remained unchanged at yesterday's 28.87 percent. -------------------------------------------------------------------------------- © Copyright 1998, Bloomberg L.P. All Rights Reserved. latinvestor.com

To: Steve Fancy who wrote (11449)	1/12/1999 1:54:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Cardoso Says Not Paying Govt Debt Is Thing of Past Duque de Caxias, Brazil, Jan. 12 (Bloomberg) -- Brazilian President Fernando Henrique Cardoso said his government has done everything possible to reduce the debt burden of Brazil's states and will not renegotiate payments from states threatening to default. Cardoso made his comments to reporters at the opening of a $150 million printing press for Organizacoes Globo, Latin America's largest media group, in the Rio de Janeiro suburb of Duque de Caxias. ''The government has already done what it can,'' Cardoso said. ''It has negotiated debts, given them subsidies and lowed their interest rates. Everybody would love to have the interest rates they're paying.'' The state's are paying between 6 percent and 7.5 percent over 30 years on debt with the federal government. Brazil's ''C'' bond today fell 2 percent, driving its yield to 17.5 percent. ''The states have to pay about 13 percent of their revenues. What they do with the rest of the money has to be well administered,'' Cardoso said. The problem, he said, is too many employees or excessive pension spending. ''The government knows what it has to do,'' he said. ''We will pay all our debts. Not paying debts is a thing of the past.'' -------------------------------------------------------------------------------- © Copyright 1998, Bloomberg L.P. All Rights Reserved. latinvestor.com

To: Steve Fancy who wrote (11449)	1/12/1999 1:56:00 PM
From: Steve Fancy	Respond to of 22640

'Markets led to Ford's dismissals,' Union president says São Bernardo do Campo, 12 - Metal Workers' Union president, Luiz Marinho, told reporters in São Bernardo do Campo, Brazil's industrial heartland, that the 2,800 dismissals announced just before Christmas by the Brazilian subsidiary of the U.S.-based automaker Ford mostly reflects problems in Brazilian markets, rather than in production. According to Marinho, Ford had 11,000 workers in 1987, reducing that number to 10,000 in 1995. Today, the U.S.-based company has only a few more than 6,000 workers in Brazil. "The government urges to understand that it needs to adopt sound (economic) measures in order to reactivate production as well as consumption," Marinho said. The Metal Worker Union's president also informed he would try to convince -- in a meeting to be held tomorrow in Brasília -- Brazil's Labor minister, Francisco Dornelles, that the government has to act soon and change its economic policy of high interest rates. (By Liliana Pinheiro)

To: Steve Fancy who wrote (11449)	1/12/1999 1:57:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil's Finance minister denies resignation Brasília, 12 - Answering to strong rumors that, among other events, has driven local stocks down today, Brazil's Finance minister, Pedro Malan, through his press officer, denied "categorically" to Agência Estado that he was about to step out of government. "The minister denies categorically that he has ever considered the possibility of resigning from his post at the Finance Ministry," Malan's press office declared. (By Beatriz Abreu)

To: Steve Fancy who wrote (11449)	1/12/1999 2:00:00 PM
From: Steve Fancy	Respond to of 22640

Year 6 - No 67 - December/98 by Unibanco We believe that whether Brazil hits or misses its targets depends on the urgency it demonstrates in balancing its budget. If Brazil shows plenty of action in grappling with the budget deficit, investor confidence in the Brazilian economy will unquestionably strengthen. In the case of a sharp fall in reserves, the Central Bank should reduce the monetary base with a consequent rise in interest rate. The international reserve targets set for March and June are realistic. These targets assume a loss of up to $5 billion for the first half of the year. The fundamental principle to maintaining a large flow of foreign direct investment is no tinkering with the rules of the game, especially in relation to tax treatment of foreign capital. Foreign direct investment was $10 billion in 1996, rising to $17 billion in the following year and ending 1998 with a total of $24 billion. We expect the figure to be around $21.5 billion next year. A gradual yet consistent adjustment in 1999, followed by resumption of economic growth as of the end of the year, may cause a major portion of profits to be reinvested in Brazil, thus improving foreign accounts. -------------------------------------------------------------------------------- Brazil and the IMF Targets Profit remittances and foreign direct investment Click here to download Unibanco's financial and economic indicators charts in Microsoft Excel/Word (file compacted in Pkzip program - 144 Kbytes) -------------------------------------------------------------------------------- agestado.com