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

To: Steve Fancy who wrote (11855)	1/15/1999 5:27:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs end up 33 pct after currency set free Reuters, Friday, January 15, 1999 at 16:37 SAO PAULO, Jan 15 (Reuters) - Brazilian stocks rose a breathtaking 33.4 percent -- posting their second biggest jump in history -- Friday after the Central Bank allowed the country's currency to float, traders said. The market's bluechip index Bovespa (INDEX:$BVSP.X) soared to finish at 6,747 points, just under the 6784-point closing reported at the end of 1998 and nearly making up all the losses it has incurred in the past month on worries that Brazil may dip into a financial meltdown. "All hungry investors came out at once," said one local trader. Stocks started soaring soon after Brazil scrapped foreign exchange limits applied to the currency, cutting the real loose for the first time since it was introduced in 1994. The move relieved investor concerns that the government will prove unable to support the currency any longer amid a wave of dollar outflows, which totaled more than $5 billion so far this month. But traders and analysts foresaw volatile sessions ahead for local stocks as they could not yet gauge the effects of the forex changes on interest rates. "There will be more people uncomfortable at today's levels, and there is a lot of digestion to be done," said Santiago Millan, Latin American strategist at I.D.E.A. consultants. "For example, will they be lowering interest rates?" he said. A large segment of the market on Friday was betting on lower interest rates after the government allowed the real to float, traders said. Even so, Millan remembered that countries, which had experienced a financial crisis in the past, such as Mexico, did not experience a decline in interest rates immediately after their forex policies were altered. Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (11855)	1/15/1999 5:29:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

S&P may cut Brazilian entities Reuters, Friday, January 15, 1999 at 16:37 (Press release provided by Standard & Poor's) NEW YORK, Jan 15 - Standard & Poor's today placed its ratings on eight Brazilian corporations, three subsovereign governments, and one structured transaction on CreditWatch with negative implications (see list below). In addition, the outlook on Radio e Televisao Bandeirantes Ltda. has been revised to negative from stable. The actions result from the decision of the Brazilian Central Bank to allow the real to trade freely; government officials have stated their intent to announce new foreign exchange measures next week. In the very near term, Standard & Poor's will be reviewing the listed credits to determine their capacity to service off-shore debt obligations in light of volatile and weak exchange rates. Other concerns center on the impact of these changes upon the economy, inflation and the already fragile market confidence that has impeded many Brazilian companies from gaining access to the foreign debt markets. The placement of Sadia S.A.'s local currency rating on CreditWatch has a negative impact on the structured finance transaction Sadia IFC Trust, as the rating on this transaction is based on and closely related to Sadia's creditworthiness as expressed by its local currency rating. The transaction's rating is not constrained by the Brazilian government foreign currency rating, Standard & Poor's said. RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS Companhia de Electricidade do Rio de Janeiro Foreign currency corporate credit rating B+ Local currency corporate credit rating BB- Eletrobras - Centrais Eletricas Brasileiras S.A. Foreign currency corporate credit rating B+ Local currency corporate credit rating BB- Espirito Santo Centrais Eletricas S.A. Foreign currency corporate credit rating B+ Local currency corporate credit rating BB- Senior unsecured debt rating B+ Bahia (State of) Foreign currency issuer credit rating B+ Ceara (State of) Foreign currency issuer credit rating B+ Rio de Janiero (City of) Foreign currency issuer credit rating B+ Senior unsecured note rating B+ Americel S.A. Foreign currency corporate credit rating B Local currency corporate credit rating B Localiza Rent a Car S.A. Local currency corporate credit rating BB- MRS Logistica S.A. Local currency corporate credit rating BB- Senior unsecured debt rating B Sadia S.A. Local currency corporate credit rating BB+ Trikem S.A. Foreign currency corporate credit rating B+ Senior unsecured debt B+ STRUCTURED FINANCE TRANSACTIONS: OUTSTANDING RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS Sadia IFC Trust US$165 million trust certs due Nov. 2, 2008 BB+ OUTLOOK REVISED TO NEGATIVE FROM STABLE Radio e Televisao Bandeirantes Ltda. Foreign currency corporate credit rating B- Local currency corporate credit rating B- Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (11855)	1/15/1999 5:37:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Malan sees market faith in free float Reuters, Friday, January 15, 1999 at 16:42 SAO PAULO, Jan 15 (Reuters) - Brazilian Finance Minister Pedro Malan boasted that the market showed faith in the country's currency by limiting its slide after the government let it float freely on Friday. "Throughout the day, without any Central Bank intervention, fears of a huge plunge in the rate never materialized," Malan told reporters. "This represents confidence in our ability to continue our fiscal efforts, with the participation of Congress." Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (11855)	1/15/1999 5:40:00 PM
From: Steve Fancy	Respond to of 22640

U.S. Ex-Im Bank head sees Brazil stabilizing Reuters, Friday, January 15, 1999 at 16:50 NEW YORK, Jan 15 (Reuters) - The United States Export-Import Bank will continue financing exports to Brazil, and the turmoil in that nation's markets should calm fairly soon, the bank's president and chairman told Reuters. "There will be in the not-too-distant future stability and investment opportunities, very attractive investment opportunities, in the (Brazilian) markets," Ex-Im Bank chairman James Harmon said after addressing a conference here. He said there would be no pullback in U.S.-Brazil trade involvement because of the devaluation of the real. Brazil on Wednesday devalued its currency by 8.2 percent, hoping to stanch the recent steady loss of currency reserves used to defend the real's narrow trading band against the dollar. On Friday, after the real and Brazil's Bovespa stock index remained under heavy pressure, Brazil said it would float the currency. Harmon spoke to business executives about investment in Africa at the Rainbow/PUSH Wall Street Project. As part of Ex-Im Bank's efforts to promote U.S. trade with Africa, the bank has been financing smaller projects in addition to its traditional focus on large transactions, Harmon said. "We are better known for financing large projects...that is changing," he said. As examples, Harmon pointed to Ex-Im Bank financing for fire trucks and drilling equipment in Ghana and said even legal and banking services could be financed as part of larger projects. The Ex-Im Bank's chairman said a new project was likely to be announced soon that would target empowerment zones in the United States to boost their foreign trade capacity. He said a program had already been put in place to provide working capital for minority business's export-related activities. Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (11855)	1/15/1999 5:41:00 PM
From: Steve Fancy	Respond to of 22640

INTERVIEW-Brazil move spells relief -Mexico finmin Reuters, Friday, January 15, 1999 at 16:54 By Caroline Brothers MEXICO CITY, Jan 15 (Reuters) - Brazil's decision to float its currency on Friday relieved world financial markets, which should spur foreign investment throughout the region and help push Mexican interest rates toward more moderate levels, Mexican Finance Minister Jose Angel Gurria said on Friday. "This surely will bring foreign investment to the whole region, the fact that a period of uncertainty for the whole region is ending," Gurria said in an interview with Reuters. Last year, Mexican interest rates soared to close on 50 percent as Brazil's financial woes hurt the Mexican economy. Mexican rates had fallen back gradually to below 30 percent at the start of January. But when Brazil tried a controlled devaluation of its real on Wednesday, Mexican rates shot back up by 300 basis points. Gurria said he thought the high rates would be short-lived. "I hope we are taking not about the coming weeks, but the coming days," he said. "There will be volatility in the rates, as we had yesterday and the day before, an increase in interest rates in the short term, and thereafter an adjustment that will permit them to return to the direction they were taking before," he said. "What I hope, now that things are clearer, is that they resume their downward trend." He said he did not expect further shocks to push Mexican rates sharply higher again in a repeat of last year's Brazilian-inspired hikes. "Objectively there would be no reason for that," he said. "The news today was very simple to the degree that Brazil has made it clear it will have a more flexible foreign exchange system." The Finance Minister said Mexico's debt profile was comfortable, and it had imposed fiscal discipline by setting a deficit target of 1.25 percent of gross domestic product (GDP) despite falling oil prices that have savaged government income. "We have a maturity profile for our internal as much as external debt that is very manageable and quite comfortable, which makes our objective situation quite solid," he said. "In Mexico we prepared for a difficult scenario." He said Brazil's troubles would not throw Mexico's economic targets off course, adding that Mexico maintained its 1999 growth forecast at 3.0 percent, inflation at 13 percent, and was aiming for a current account deficit smaller than 1998's. And he said Brazil could expect advantages from moves to free its currency. "I can only speak from Mexico's experience, and the experience in Mexico is very clear -- because of allowing a free float, we have a competitive exchange rate, we have a flexible exchange rate, and we have the highest reserves in our history, and we do not have to spend them to sustain our exchange rate." "It is very important that there are now decisions taken. The worst thing is uncertainty. The worst thing that could happen is that with an economy as important as Brazil's there could be these question marks," he said. "The fact that one of the biggest countries in the world, in this case Brazil ... has taken this decision, represents for all of us a very important and a very positive piece of news." Mexico, which sees in Brazil's financial crisis an echo of its own peso crash just over four years ago, has been one of the Latin American economies worst hit by uncertainty over Brazil's financial future. Its floating peso and domestic interest rates suffered the full impact of market forces while the Brazilian real was shielded by remaining fixed against the dollar despite its perceived overvaluation. "The fact that a period of uncertainty, instability, has ended is good for everyone, and it's very important in the case of Brazil because it defines the new bases to which they can tie their economic program," Gurria said. "With the international support that Brazil already has, ... and with a more flexible (foreign exchange) scheme, we all win as far as the uncertainty is concerned." mexicocity.newsroom@reuters.com)) Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (11855)	1/15/1999 5:43:00 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

Brazil's Cardoso says currency float restored faith Reuters, Friday, January 15, 1999 at 16:56 BRASILIA, Jan 15 (Reuters) - Brazilian President Fernando Henrique Cardoso said on Friday the Central Bank's decision to allow the currency to float restored confidence in Latin America's largest economy, but he vowed to continue defending the real. Speaking to the nation after the Central Bank suspended its policy of holding the currency in a foreign exchange trading range, Cardoso said the decision was made to preserve foreign reserves and to encourage a decline in sky-high interest rates. "I am obliged to defend the real," Cardoso said. "I could not let the reserves continue to seep out and leave Brazil without defenses. This way, we maintain our reserves." Cardoso said: "The change in the exchange rate removes lack of confidence in the economy and creates the conditions so that in the near future we can let interest rates fall." The Brazilian leader, re-elected in October on the back of the inflation-busting real, said fiscal reform was more important now than ever and that he trusted Congress to push through measures designed to tackle a huge public-sector fiscal deficit equal to 8 percent of gross domestic product. Cardoso vowed to honor all Brazil's international obligations and comply with macroeconomic targets set under an international rescue package. He also reiterated his confidence in Finance Minister Pedro Malan. Copyright 1999, Reuters News Service