Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Bob Howarth who wrote (12040)	1/20/1999 11:30:00 AM
From: Steve Fancy	Respond to of 22640

Bellsouth Sees 1st-Qtr Charge of About $172 Mln on Brazilian Devaluation BellSouth Sees 1st-Qtr Charge for Brazil Currency Devaluation Atlanta, Jan. 20 (Bloomberg) -- BellSouth Corp., the No. 4 U.S. local phone company, said it expects to record a first- quarter charge because Brazil's currency devaluation reduced the value of its investments in that country. The company said it hasn't yet determined the amount of the charge. Based on the floating rate of the Brazilian real Jan. 19, the charge would be about $172 million, or 9 cents a share, Bell South said. Brazil last week let its currency weaken in a bid to revive the country's slumping economy, sending global stock markets tumbling. Companies with large investments in the country led the declines. Atlanta-based BellSouth is expected to earn 45 cents a share in the first quarter, the average estimate of analysts surveyed by First Call Corp. The company said it remains committed to doing business in Brazil and elsewhere in Latin America. BellSouth shares fell 3/16 to 46 13/16 in early trading. -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved. latinvestor.com

To: Bob Howarth who wrote (12040)	1/20/1999 11:33:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Congress to Vote on Pension Tax to Slash Growing Budget Deficit Brazil Congress to Vote on Tax to Cut Budget Gap (Update4) (Adds Greenspan comment.) Brasilia, Brazil, Jan. 20 (Bloomberg) -- Brazil's gamble that last week's currency devaluation will help revive the slumping economy faces a critical test today when Congress considers a new tax on retired civil servants. Stocks rose on optimism the lower house of Congress will pass the deficit-cutting measure it defeated four times the past year, rather than risk triggering a burst of capital flight and the cut-off of international aid. The benchmark Bovespa index rose for the fourth day, gaining 3.9 percent in early trade. ''If Brazil can't get legislation through in times of crisis, when can it?'' said Paul McNamara, an emerging market strategist at Julius Baer Investment Management, which invests a small proportion of its $5 billion global bond portfolio in emerging markets. ''A lot hinges on today's vote.'' The tax, aiming to raise 3.1 billion reais ($2 billion) this year, is vital to convincing skeptical lenders the government can narrow its 73 billion reais budget deficit and reduce interest rates. The pension system has become a symbol of Brazil's failure to live within its means. Debt ''Follow through in reducing budget imbalances and in containing the effects on inflation of the drop in value of the currency will be needed to bolster confidence and to limit the potential for contagion to the financial markets and economies of Brazil's important trading partners,'' said U.S. Federal Reserve Chairman Alan Greenspan in Congressional testimony today. In New York, Finance Minister Pedro Malan met with senior investment bankers, financier George Soros and Federal Reserve Gov. William McDonough at the New York Federal Reserve Bank to shore up support for the government efforts, wire service reports said. Bankers attending included Jon Corzine, co-chairman of Goldman Sachs & Co; David Komansky, chief executive officer of Merrill Lynch & Co; and Henrique de Campos Meirelles, president of BankBoston Corp. A jump in interest rates and a 22 percent decline in the currency's value against the dollar the past week won't keep the government from repaying its 320 billion reais of domestic debt, Malan said, countering speculation of a debt rescheduling, according to the reports. The currency was steady, at 1.575 reais to the dollar, from 1.56. Malan declined to comment on the real's value. Vote He also expressed confidence that while lawmakers defeated a similar pension bill last month, they'd pass it now. A preliminary vote is scheduled for about 11 a.m. New York time and final vote likely in the evening. The currency devaluation has raised the stakes for legislators typically focused on local issues. ''Before, the defeats were only the government's,'' said Deflim Netto, a deputy who previously voted against the tax. ''Now a defeat could hurt the whole country.'' The taxes are part of 28 billion reais in deficit cuts proposed last year as condition for a $41.5 billion aid package arranged by the International Monetary Fund. ''This vote is fundamental,'' for the market, said Alexandre Mendes, who manages $10 million in equities at Banco Patente SA in Sao Paulo. ''I think the government is really confident it can win this time.'' The government, which controls both houses of congress, failed late Tuesday to muster enough votes needed to put the pension bill on the agenda for today, and will try again this morning. If passed by the house, it will move to the Senate for final passage. Rising Rates The vote comes as Brazil struggles to cut its budget deficit amid rising interest rates and a weaker currency. The Brazilian central bank boosted overnight interbank rates to 32.5 percent from 32 percent. Capital outflows have averaged more than $500 million a day this month, sapping reserves -- more than $70 billion last summer -- by more than $6 billion to about $30 billion. Brazil's failure to overhaul its cash-strapped pension system has become symbolic of its inability to narrow its deficit. ''The government hasn't the money to meet its obligations with pensioners,'' said Communications Minister Pimenta da Veiga in television interview this morning. '' I don't want to think about a defeat today.'' The pension tax was to have been reconsidered in February when a new slate of lawmakers takes over. The recent currency devaluation and spike in interest rates pushed up the schedule. ''If the government manages to get approval, it would be a very positive signal of its political power within congress'' said Fernando Ferreira, treasury manager at Placas do Parana, a construction materials maker. ''It wouldn't just be for the fiscal aspect but also a it would be very symbolic.'' Although the government has the support of more than three quarter of the lawmakers in the house, congressmen didn't vote for the bill because many are retired state workers or have family members who are. The bill could tax retirees for the first time. Pensioners earning between 600 reais and 2,500 reais monthly would be taxed at a rate of 11 percent to 25 percent. It would also increase to 25 percent, from 11 percent, the income tax rate for current state workers. While Brazil collects about 3 billion reais in taxes from 520,000 state workers, it spends about 22 billion reais paying pension to about 900,000 retired workers. -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved. latinvestor.com

To: Bob Howarth who wrote (12040)	1/20/1999 11:42:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Ctrl Bk Raises Interbank Rate To 32.5% Vs 32% Tue Dow Jones Newswires SAO PAULO -- Brazil's Central Bank on Wednesday set its overnight interbank market rate at 32.5%, up from 32% the previous day. Dealers said the Central Bank is testing the market following the government's decision on Monday to allow the real (BRR) to float freely against the dollar. "The central bank will have to continue testing the market until it looks like the exchange rate is holding relatively steady," one Sao Paulo dealer said. "It's really impossible to predict what the (central bank) will do now. It all depends on what happens on exchange markets (Wednesday)." The real opened trading Wednesday slightly weaker at BRR1.56/dollar, from BRR1.5580/dollar at the previous close. The real had opened trading Tuesday at BRR1.59/dollar, but strengthened following the government's decision to effectively raise interest rates. Dealers said that the local currency continues to be pressured by heavy net capital outflows, which have totaled about $5 billion in the past six days. Analysts have said that interest rates will remain the government's principal tool in taking pressure off the real during the first few days of the new free-float system. -By Stephen Wisnefski; (55-11) 813-1988; swisnefski@ap.org

To: Bob Howarth who wrote (12040)	1/20/1999 11:44:00 AM
From: Steve Fancy	Respond to of 22640

Dividend Declarations: PBT, PCM, PRT, SJT, FNM, PINN, TBR Dow Jones Newswires Company Period Amount Payable Record Funds, REITs, Investment Cos., LPs PermianBasin Rylty M .006383 2/12/99 1/29 PIMCO CommlMtgSecs M .09 3/8 2/11/99 1/29 Prime Retail Inc Q .29 1/2 2/16/99 2/ 1 SanJuanBasin Rylty M .050214 2/12/99 1/29 Increased New Old Fannie Mae Q .27 .24 2/25/99 1/29 PinnacleBncGrp Q .25 .23 2/11/99 2/ 1 Foreign Telecom Brasil ADS - t.2261 1/25 M-Monthly Q-Quarterly t-Approximate U.S. dollar amount per American Depositary Receipt/Share before adjustment for foreign taxes.

To: Bob Howarth who wrote (12040)	1/20/1999 11:45:00 AM
From: Steve Fancy	Respond to of 22640

Brazil GM Unit Raises Prices By Up To 11%,Challenges Cardoso Dow Jones Newswires SAO PAULO -- Brazil's unit of General Motors Corp. (GM) will raise its prices between 1.99% and 11.37%, depending on the model, a company spokesman said Wednesday. He said the company won't comment on the decision or the reasons behind it. GM dealerships said the company cited the local currency's depreciation, which will likely increase the cost of imported parts, the O Estado de Sao Paulo newspaper reported Wednesday. The real has given up some 22% of its value in one week since the government altered a long-standing policy of strict controls on currency movements. The price increase, however, is valid as of Thursday and affects all vehicles, including those already in stock. With the decision, GM is challenging President Fernando Henrique Cardoso, who earlier this week said he wouldn't tolerate preventive price increases. At the time, Cardoso threatened to raise import duties for industries that raise prices before production costs effectively go up. With the real's depreciation, Brazilians' big fear is the return of hyperinflation, which the government was able to tame with its Real Plan economic stabilization program, introduced in 1994 by Cardoso when he served as Finance Minister. The Brazilian units of Volkswagen AG (G.VOW), Ford Motor Company (F), and Fiat SpA (FIA) will also follow suit, the O Estado report said. The newspaper also quoted an antitrust agency official as saying that "the case calls for investigation. "We'll have to see if there are reasons to the increase," the official said, adding that the agency will help the government fight inflationary pressures. The agency, known as Cade, may levy a fine against GM worth up to 30% of company's sales if there is indication of abuse of economic power. -By Adriana Arai; (5511) 813-1988; aarai@ap.org

To: Bob Howarth who wrote (12040)	1/20/1999 11:46:00 AM
From: Steve Fancy	Respond to of 22640

Some Fund Managers Take Advantage Of Brazilian Bargains Dow Jones Newswires (This repeats an item originally published Tuesday) NEW YORK (Dow Jones)--Some portfolio managers are bargain-hunting in Brazil's troubled markets. Bond fund manager Daniel J. Fuss loaded up on Brazilian debt last week, when the government decided to do away with its policy of defending the national currency. "It was a quite a roller-coaster ride," Fuss, who manages New England Strategic Income Fund and Loomis Sayles Bond Fund, told reporters at an annual press conference held by New England Funds. While Fuss is almost finished buying Brazilian debt, his equity fund peers are just getting started. David G. Herro, portfolio manager of New England Star Worldwide Fund and the Oakmark International Fund, has been steadily bolstering his Brazilian stake ever since things started heating up this year. Herro expects Brazil to be the next South Korea, once recovery sets in. "Brazil is not Russia," he said. "When people look at Brazil today, they should look at (South) Korea one year ago." South Korean funds staged a remarkable comeback late in 1998 after getting hammered in the summer. One of last year's top-performing funds, Mathews International Korea Fund, rose 96.15%, according to Lipper Inc. Fuss of Loomis Sayles is about to see his South Korean investments pay off. Earlier Tuesday, credit-rating agency Fitch IBCA raised South Korea's sovereign rating to investment-grade level, from "junk" status. That means investors who got ahold of the debt early on will soon be rewarded, Fuss says. Roughly 7% of New England Strategic Income Fund is invested in South Korean debt. Herro expects a repeat performance in Brazil over the next 18 months. He's especially upbeat about spinoffs of recently privatized Brazilian telecom company Telecomunicacoes Brasileiras S.A., or Telebras. He also likes regional bank Unibanco-Uniao De Bancos Brasileiros S.A. (UBB). New England Funds, an affiliate of Nvest L.P., is a family of 23 mutual funds with $7.4 billion in assets as of Dec. 31, 1998. -Margaret Boitano; 201-938-2046 margaret.boitano@cor.dowjones.com

To: Bob Howarth who wrote (12040)	1/20/1999 11:48:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Malan: Meeting With N.Y. Bankers Productive By THOMAS CATAN; 201-938-2225 Dow Jones Newswires NEW YORK (DOW JONES)--Brazilian Finance Minister Pedro Malan characterized his meeting Wednesday morning with New York Federal Reserve Chairman William McDonough and a group of top bankers as "constructive and productive." Malan was in New York to assure Brazil's principal creditors following the flotation and devaluation of the country's currency, the real. "We had an opportunity to explain how we see the situation in Brazil, where we are now and where we go from here," Malan said, speaking to reporters after the meeting. Although participants wouldn't disclose the list of people present at Wednesday's meeting, Malan said it had been attended by "around 10" top bankers, as well as the New York Fed chairman. Several participants - George Soros; William Rhodes, vice chairman of Citibank; David Komanski, chairman of Merril Lynch; and Henrique Meirelles, president and chief operating officer of Bank Boston - declined to comment following the discussion. Exiting the talks, Malan said he had "no comment on the appropriate level of the real," adding that the government hadn't set any specific point at which to intervene in defense of the currency. He added that there has been no discussion of restructuring Brazil's mounting debt, saying "We are not going to have any domestic debt restructuring." On the fiscal front, Malan said he expected congress to vote on and approve social security reform Wednesday, calling it a "very important vote." International investors have been watching Brazil closely for signs that it will carry out the reforms required under its $41.5 billion rescue from the International Monetary Fund. That includes passage by congress of the necessary reforms to the pension system. Finally, Malan said the bankers gathered Wednesday in New York didn't discuss any alternative to the new free-floating currency regime for the real. "The issue of a currency board was raised over the last several months in Brazil," Malan said. "We explained why we don't think it is an appropriate exchange regime for Brazil." Brazil was thrown into crisis after the state of Minas Gerais earlier this month declared a moratorium on payment of its debts to the federal government. The resultant outflow of foreign currency forced Brazil to effectively devalue the real by widening the band in which the real is allowed to trade. The real rallied Tuesday after Brazil's central bank raised interest rates, closing at 1.56 reals per dollar, up from 1.59 reals per dollar at Monday's close. It was slightly weaker at midday Wednesday at 1.5755 reals per dollar. --------------------------------------------------------------------------------

To: Bob Howarth who wrote (12040)	1/20/1999 11:51:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Credibility Hinges On Key Congress Vote Wednesday Dow Jones Newswires SAO PAULO -- Brazil's Congress will convene later Wednesday to vote on a key component of its fiscal austerity plan, the results of which will go a long way in determining the country's path following a week of turmoil. The lower house of Congress is slated to vote on a measure that increases social security taxes for civil servants and would require retired public workers to also contribute to the bankrupt pension system. The controversial measure, which aims to save the government some 4 billion reals (BRR)($1=BRR1.55) per year, has been voted down four times in the last four years, most recently in December. Analysts cited last month's vote as one of the factors that set off the crisis that culminated in the government's decision this week to alter its exchange policy and hike interest rates. Lower house approval Wednesday would still require ratification from the Senate, and no date has yet been set for when the upper house would vote on the issue. Still, a government victory Wednesday would help restore some of the credibility lost over the past month, analysts said. "Approval will allow for a cut in interest rates, and will be a good sign to investors regarding fiscal reform," said Marcelo Allain, an economist with BMC bank in Sao Paulo. Analysts expect that Congress will approve the measure this go around after the government modified its proposal to make it more palatable - exempting, for example, some retirees older than 70 and those earning less than BRR600 per month. They added, however, that another setback would be devastating. "The market expects a quick response to the crisis, and if (the vote) is postponed, it would give a damaging signal to the market." The local equities market was bullish throughout morning trading Wednesday, with investors betting on a smooth approval of the pension measure Wednesday. At midsession, the Sao Paulo Stock Exchange's Bovespa Index stood at 7510, up 129 points or 1.8% from Tuesday. The lower house had been scheduled to vote Tuesday on whether to include the pension measure as an urgent item on its Wednesday agenda, but government allies scrapped the vote to avoid running the risk of possibly losing. While analysts said the government was overly cautious, the fast-track consideration is potentially more problematic for the government as it requires an absolute majority, or half plus one of the 513 members of the lower house. Only a simple majority, or half plus one of all members present at the vote, is needed to pass the actual pension legislation. Wednesday's vote for fast-track consideration is set to occur after 1800 GMT. If the request is approved, the measure itself will be the last item on the agenda, meaning the result won't likely be known until after local markets close. Government officials expressed confidence Wednesday that Congress wouldn't let them down again. As reported, Pedro Malan, speaking in New York following a meeting with Federal Reserve officials and investors, said the pension measure should pass. Meanwhile in Brasilia, Communications Minister Pimenta da Veiga, who serves as President Fernando Henrique Cardoso's point man with the Congress, said that the government expects the measure to pass Wednesday because of "the importance that the voting carries for the country." In an interview with the Globo television network, da Veiga noted that that Congress hasn't let the country down in other moments of crisis and that it should respond accordingly and back the measure Wednesday. --------------------------------------------------------------------------------

To: Bob Howarth who wrote (12040)	1/20/1999 12:13:00 PM
From: DMaA	Read Replies (3) \| Respond to of 22640

Bob, according to the WSJ, Clinton's plan is nothing like a fully funded pension plan: Specifically, the president's plan would set aside about $2.8 trillion, or 62% of the projected budget surpluses over the next 15 years, to bolster Social Security. Of that amount, the administration would invest $650 billion to $700 billion in stocks, in hopes of getting higher returns than those on the Treasury debt in which Social Security funds now are invested. The remainder of the $2.8 trillion would be invested in Treasury securities.