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

To: Steve Fancy who wrote (11489)	1/12/1999 8:53:00 PM
From: wl9839	Read Replies (2) \| Respond to of 22640

Steve, I wish to thank you very much for all the work you do in collecting and publishing all the data on the Brazilian market and political situation. I also thank those that have direct experience with Brazil in giving a "local" spin on the interpretation of data. Query, this board always seems to have focused on Brazilian equities- is it permitted to talk about Brazilian debt? It seems that with the recent plunge in the C Bond market that many corporate issuers are seeing their debt trade at equity like returns. As an example, I acquired a small block of 10% coupon Banco Fibra dollar denominated Euorbonds in the fall for 65 cents on the dollar although they had only a maturity of one year. It would seem that similar opportunities should exist for other companies of which we have knowledge such as UBB. Any thoughts on this topic, especially any potential risk that Brazil in an extreme situation would impose a Russian like moratorium on payments in dollars on maturing corporate debt?

To: Steve Fancy who wrote (11489)	1/13/1999 12:19:00 AM
From: David Petty	Read Replies (1) \| Respond to of 22640

Here is some more about The Jerk (we have The Creep): January 13, 1999 Americas Latin American Markets Exasperated With Itamar Franco's Debt Moratorium By PETER FRITSCH Staff Reporter of THE WALL STREET JOURNAL SAO PAULO, Brazil -- A Brazilian state governor has become a serious irritant to emerging markets since declaring a moratorium on debt payments owed the central government. The decision by Minas Gerais Gov. Itamar Franco is particularly nettlesome at a time when investors are unwilling to cede Brazil, a bellwether market for the region, even the slimmest margin for error. Since Mr. Franco last week said he would stop payment for 90 days on his state's $15 billion in federal debt, Latin American emerging markets have fallen sharply, doing so again Tuesday. But as markets react to his decision and the Brazilian government retaliates by slashing disbursements to his state, Mr. Franco's rhetoric is becoming only shriller. He compares the beleaguered government of President Fernando Henrique Cardoso to a "loan shark," extracting usurious interest rates from distressed borrowers. The protagonist of this drama is seen by the vast majority of political commentators here as a bitter man who squandered his only other appearance on the national stage. Mr. Franco, 68 years old, had enjoyed a long and undistinguished career as a senator from Minas Gerais when former President Fernando Collor made him his vice president in 1991. When Mr. Collor was forced to resign amid corruption allegations in mid-1992, Mr. Franco became the reluctant head of state, announcing his desire to leave office within a year. Supreme Indecision Inheriting a political crisis on top of a burgeoning economic crisis, Mr. Franco reacted with supreme indecision. No fewer than 43 cabinet ministers came and went in the course of his two-year administration. He ran through four finance ministers and three central bank presidents in his first year in office, with a passel of other ministers quitting in a huff. Public Administration Minister Luiza Erundina stepped down in 1993, declaring she had never met "a stupider person than Itamar." (His rejoinder: "That stupidity became clear when I named her.") Mr. Franco possesses a hair-trigger temper, known for lashing out at photographers like an unreformed Sean Penn. As president, he axed dissenting ambassadors at the drop of a hat and wasn't above firing off news releases to decry the scribblings of political cartoonists. The press tarred him a hapless clown during carnival celebrations when photographers caught him dancing with a model who was wearing no underwear. At the same time, Mr. Franco was an adherent to the free-market reforms begun by Mr. Collor, even if he wasn't their most stalwart champion. He threatened to derail the budding privatization program early in his term by meddling in the role of the state development bank and insisting on final say regarding minimum bid prices for state companies. But while Mr. Franco may have been in over his head in many respects, he left one important legacy: the appointment of Mr. Cardoso as finance minister. From that post, Mr. Cardoso conceived the so-called Real Plan, which stabilized the currency and licked Brazil's bruising inflation. The plan and its creator quickly overshadowed the drift associated with Mr. Franco, vaulting Mr. Cardoso to the presidency in 1994. Mr. Franco, unable by law to seek re-election, quietly accepted the ambassador's post in Portugal, later becoming ambassador to the Organization of American States in 1996. Deep Resentment Mr. Franco's friends say he harbors a deep resentment toward Mr. Cardoso for having received so little credit for his hand in bringing stability -- albeit a still fragile stability -- to Brazil. Mr. Franco himself hinted at the hurt in a recent interview with newspaper O Estado de Sao Paulo. "If we were to break it down to a mathematical equation, [Mr. Cardoso] owes me a lot more than I owe him... . I made him the presidential candidate." Former President Tancredo Neves once said Mr. Franco has an uncanny ability to "preserve his hates in the freezer." As Mr. Cardoso's reform effort picked up speed, Mr. Franco suddenly became a strident government critic, blasting the government from his ambassadorial posts for major privatizations and the adoption of high interest rates in defense of the currency. He bristled especially at Mr. Cardoso's ability to pass a law allowing him to seek re-election. By 1998, Mr. Franco had decided to seek the presidency he was once so eager to leave behind. But his Democratic Movement Party unceremoniously ignored him at its national convention, choosing instead to support Mr. Cardoso of the Social Democratic Party. Rebuffed and embittered, Mr. Franco ran for governor of Minas Gerais, defeating Social Democratic incumbent Eduardo Azeredo in a runoff. Sworn in earlier this month, Mr. Franco wasted little time working his way back into the media's starting lineup, declaring the debt moratorium in his first week in office. Though Mr. Franco claims he took the action (which violates a contract signed last year by Mr. Azeredo and approved by the state legislature) because of a lack of money to pay, cynics see an ulterior motive. "He appears to be looking to the presidency in 2002 with little consideration for the damage he is doing to Brazil in the meantime," said former Finance Minister Marcilio Marques Moreira. Added Antonio Carlos Magalhaes, the powerful Senate president: "Itamar is trying to take the lead of the opposition, but he's being stupid. He'll end up isolated."

To: Steve Fancy who wrote (11489)	1/13/1999 12:31:00 AM
From: David Petty	Read Replies (2) \| Respond to of 22640

Their will be an assassination in Brazil within the next 6 months UBB may have lower earnings but they do not have a loss... unless they have hired some US corporation's creative numberer Their will be a devaluation of 20% within the next 3 months TNE will be sold to Steve Fancy for a fancy amount with the rest of this board as members of the board TBH will bottom as soon as we find Franco's girlfriend from the past (on the beach... quite a dancer and boozer and loves rough sex) probably around 5_... I just may have left off a digit We will all be dead or wealthy on April 1, 2001 And for those who do know, here is one from beyond - - - WEBB

To: Steve Fancy who wrote (11489)	1/13/1999 2:17:00 AM
From: djane	Read Replies (1) \| Respond to of 22640

Fairly positive commentary below. Is the Brazil crisis for 'real'? cbs.marketwatch.com By Paul E. Erdman, CBS MarketWatch Last Update: 5:03 PM ET Jan 12, 1999 Columns & Opinion SAN FRANCISCO (CBS.MW) -- The latest reason/excuse/explanation of a renewed weakening of the dollar, and a temporarily faltering stock market, is the fear that Brazil is going the way that Mexico went a few years ago, and that it will drag all of Latin America down with it. The key to this is whether or not Brazil will be forced to devalue the real. That, in turn, is a function of whether or not investor confidence in Brazil can be prevented from collapsing further. Should it not, Brazil could indeed go down the same route that Mexico went just four years ago. Then, as a result of capital flight, Mexico lost all of its currency reserves, was unable to service its short-term foreign debt ($30 billion in tesabonos), and had no choice but to devalue the peso and raise domestic interest rates to sky-high levels. Deep recession followed. Likewise today where Brazil is concerned. What ultimately stands between now and a forced devaluation are Brazil's foreign exchange reserves. They peaked at $75 billion early last year. Then, as a result of capital flight, plummeted to $35 billion by year's end. By now they are probably under $30 billion and still falling. One key to whether this process will end with a forced devaluation of the real depends on whether or not investors are convinced that the Brazilian government's austerity program will work, a program designed to create a domestic climate of low inflation and a stable real by creating annual fiscal surpluses of 2.6% of GDP in 1999, 2.8% in 2000, and 3% in 2001. Should this program succeed Brazil's debt-to-GDP ratio would stabilize at 44%, as compared US ratio of 65%, and Japan's debt-to-GDP ratio of over 100%. So from that standpoint, the situation in Brazil is not nearly as bad off as some observers believe. But it is tottering on the edge where international liquidity is concerned. How close is Brazil to running out of money? In searching for the answer to this, Offitbank, in a recent report, made a' detailed calculation of Brazil's total financing needs in 1999. It came to the conclusion the Brazil's net financing requirement will be $29.8 billion. Will it have the resources to cover that? Offitbank gives an emphatic yes. If you add the $37 billion which will become available under the IMF/G7 support program to the $25 billion of currency reserves which could be left after the current mini-panic subsides, it will mean that Brazil will still have double the amount of reserves necessary to cover its international payments in 1999. The real, then , will not be devalued. If this message sinks in, my guess is that the worries about Brazil going the way of Mexico in 1994/95 or Russia in 1998 will subside. Those speculators who live off of trouble will then have to look elsewhere. Economist and author Paul E. Erdman is a columnist for CBS MarketWatch. © 1998 MarketWatch.com, L.L.C. All rights reserved. Disclaimer. MarketWatch.com is a joint venture of CBS and Data Broadcasting Corporation. CBS and the CBS "eye device" are registered trademarks of CBS Inc.