Brazil's Braskem Set To Become Global Petrochemicals Player
RIO DE JANEIRO (Dow Jones)--Brazilian petrochemicals giant Braskem SA (BAK, BRKM5.BR) will gain much-needed muscle to compete on the global stage with a deal for rival Quattor Petroquimica SA (SZPQ4.BR).
Earlier Friday, Quattor holding company Unipar (UNIP5.BR) said that it had agreed to sell its stake in the company to Braskem for 870 million Brazilian reals ($478 million).
The widely anticipated deal, which first appeared on the radar last August, will create the world's sixth-largest producer of plastic resins. Braskem, already Latin America's largest petrochemicals company, will now have the scale to compete with global players such as Dow Chemical Co. (DOW) and BASF SE (BASFY, BAS.XE).
The fusion will allow closely held industrial conglomerate Odebrecht and state-run energy giant Petreleo Brasileiro SA (PBR, PETR4.BR), or Petrobras, to form the so-called 'Nova Braskem,' or new Braskem. The combined Braskem-Quattor will have revenue of about BRL30 billion.
Odebrecht will control the new company with a 53.8% stake, while Petrobras will retain the remaining 46.2%. Odebrecht and Petrobras will share strategic decisions at Braskem.
The share breakdown could face questions from antitrust regulators.
The deal effectively nationalizes Brazil's petrochemicals industry in the hands of Petrobras. The combined Braskem-Quattor would produce 100% of Brazil's polyethylene, polypropylene and PVC--resins used to produce everything from kitchen utensils to auto parts.
Braskem said it will raise between BRL4.5 billion and BRL5 billion in new capital through a share offer. A holding company formed by Odebrecht and Petrobras, called BRK, will subscribe to BRL3.5 billion of the share offer.
The deal should end a contentious legal fight brought by one of the members of the Geyer family, which controlled Unipar, seeking to thwart the merger.
The deal had been under way since mid-2009, when Braskem, Petrobras and Quattor acknowledged talks on a 'strategic alliance.' India's Reliance Industries Ltd. (500325.BY) was also rumored to be in talks with Quattor about a possible acquisition.
Brazil's petrochemicals industry was privatized in the mid-1990s as stakes in 27 companies were sold, raising $3.7 billion for the government. But intense competition in the sector resulted in consolidation starting in 2001.
The two largest players, Braskem and Quattor, solidified their positions in 2008.
Quattor was formed when Petrobras bought Suzano Petroquimica and consolidated those assets with those held by Unipar to form Brazil's second-largest petrochemicals company behind Braskem.
Petrobras also teamed with Braskem to purchase the petrochemicals assets of Ipiranga. Petrobras then rolled some of its petrochemical assets into Braskem in exchange for a 40% stake in the company.
Petrobras shares were fractionally higher at BRL34.34 in early trading on the Sao Paulo Stock Exchange. Braskem shares jumped 2.9% to BRL14.34, while Unipar shares were halted at BRL2.94. The broader market as measured by the Ibovespa stocks index was 0.4% lower at 66,005 points.
-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; Jeff.Fick@dowjones.com
Friday, January 22, 2010
Thursday, January 21, 2010
Brazil's Mantega Paints Positive Picture At Cabinet Meeting - WSJ.com
Brazil's Mantega Paints Positive Picture At Cabinet Meeting
SAO PAULO (Dow Jones)--Brazil is riding the crest of an economic wave with international investors, local consumers and industrial leaders all optimistic about the country's prospects for 2010 and beyond, Finance Minister Guido Mantega told a cabinet meeting Thursday.
According to his presentation, the Finance Ministry expects Brazil's gross domestic product to grow 5.2% in 2010 and average growth to remain at around 5% for the next five years.
The economy is returning to growth at levels seen before the global economic crisis and those levels will be sustainable in the years to come because inflation is under control, the government is committed to fiscal responsibility, exposure to external risk is low and investment levels are high, Mantega said.
The figures presented by the finance minister were broadly in line with market expectations.
He noted that the economy is being driven by domestic demand, which is seen growing 7.3% in 2010, recovering from an estimated 0.1% drop in 2009.
Meanwhile, investment levels are expected to jump this year. Gross fixed capital formation is seen rising 16.1% in 2010, bouncing back from a decline of 10.0% last year, according to government projections.
Industrial production is seen up 7.1% in 2010 after declining an estimated 5.3% last year.
However, Mantega did touch on one negative facet of the economy, namely the deterioration of the country's current account.
His presentation indicated Brazil's current account deficit would widen to 2.09% of GDP in 2010 from 1.55% in 2009.
-By Alastair Stewart, Dow Jones Newswires; 5511 2847-4520; alastaiir.stewart@dowjones.com"
SAO PAULO (Dow Jones)--Brazil is riding the crest of an economic wave with international investors, local consumers and industrial leaders all optimistic about the country's prospects for 2010 and beyond, Finance Minister Guido Mantega told a cabinet meeting Thursday.
According to his presentation, the Finance Ministry expects Brazil's gross domestic product to grow 5.2% in 2010 and average growth to remain at around 5% for the next five years.
The economy is returning to growth at levels seen before the global economic crisis and those levels will be sustainable in the years to come because inflation is under control, the government is committed to fiscal responsibility, exposure to external risk is low and investment levels are high, Mantega said.
The figures presented by the finance minister were broadly in line with market expectations.
He noted that the economy is being driven by domestic demand, which is seen growing 7.3% in 2010, recovering from an estimated 0.1% drop in 2009.
Meanwhile, investment levels are expected to jump this year. Gross fixed capital formation is seen rising 16.1% in 2010, bouncing back from a decline of 10.0% last year, according to government projections.
Industrial production is seen up 7.1% in 2010 after declining an estimated 5.3% last year.
However, Mantega did touch on one negative facet of the economy, namely the deterioration of the country's current account.
His presentation indicated Brazil's current account deficit would widen to 2.09% of GDP in 2010 from 1.55% in 2009.
-By Alastair Stewart, Dow Jones Newswires; 5511 2847-4520; alastaiir.stewart@dowjones.com"
Itau Raises Target On Brazil's Eletrobras ADRs To $31.00 - WSJ.com
Itau Raises Target On Brazil's Eletrobras ADRs To $31.00
SAO PAULO (Dow Jones)--Itau Securities raised the level it considers fair value on shares of Brazil energy company Centrais Eletricas Brasileiras (EBR), or Eletrobras, for the year ending 2010, Itau said in a report Thursday.
The new target price for Eletrobras' American Depositary Receipts is $31 each and the new target for the local shares (ELET3.BR) was raised to 53.40 Brazilian reals ($30) from a previous fair value price of BRL41.50.
Itau cited provisional measure MP 466, which finally became law on Dec. 9 and provides new subsidies to the company's northern electric power operations, coupled with the recent BRL12 billion capitalization of Eletrobras' subsidiaries like Furnas and Chesf.
Another plus is continued talks between Eletrobras and the government for the payment of billions in back dividends from the 1970s.
'The company has been dishing out over a billion reals a year for many years to account for these back payments. Once these debts are paid, it clears the company from having to account for that money on its balance sheet and improves greatly Eletrobras' corporate governance,' said Eduardo Cancian, one of the report's authors.
Eletrobras alleged that it could not pay dividend payments decades ago because its dollar debts surpassed its cash position, and therefore it did not have the money to pay investors.
Itau said it expects 'positive news flow throughout 2010 to keep boosting the stocks.'
The bank also said it suspected Eletrobras would 'strengthen...independent of who the winner' will be in Brazil's 2010 presidential elections between opposition candidate and Sao Paulo state governor Jose Serra and President Luiz Inacio Lula da Silva's chosen successor, Dilma Rousseff, currently chief of staff.
Eletrobras is a federal holding company operating 39% of Brazil's total installed capacity. The company produces more than 39,000 megawatts. It operates the massive Itaipu hydroelectric power station, the largest in Brazil.
On Thursday, Eletrobras shares were trading up 2.26% to BRL37.53. Its preferred shares (ELET6.BR) were up 1.3% to BRL31.30. Both were outperforming the Ibovespa stock index, down 1.03% to 67,497 points in the early afternoon hours.
In New York, Eletrobras' ADRs were up 1.68% to $21.16.
-By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541, kenneth.rapoza@dowjones.com"
SAO PAULO (Dow Jones)--Itau Securities raised the level it considers fair value on shares of Brazil energy company Centrais Eletricas Brasileiras (EBR), or Eletrobras, for the year ending 2010, Itau said in a report Thursday.
The new target price for Eletrobras' American Depositary Receipts is $31 each and the new target for the local shares (ELET3.BR) was raised to 53.40 Brazilian reals ($30) from a previous fair value price of BRL41.50.
Itau cited provisional measure MP 466, which finally became law on Dec. 9 and provides new subsidies to the company's northern electric power operations, coupled with the recent BRL12 billion capitalization of Eletrobras' subsidiaries like Furnas and Chesf.
Another plus is continued talks between Eletrobras and the government for the payment of billions in back dividends from the 1970s.
'The company has been dishing out over a billion reals a year for many years to account for these back payments. Once these debts are paid, it clears the company from having to account for that money on its balance sheet and improves greatly Eletrobras' corporate governance,' said Eduardo Cancian, one of the report's authors.
Eletrobras alleged that it could not pay dividend payments decades ago because its dollar debts surpassed its cash position, and therefore it did not have the money to pay investors.
Itau said it expects 'positive news flow throughout 2010 to keep boosting the stocks.'
The bank also said it suspected Eletrobras would 'strengthen...independent of who the winner' will be in Brazil's 2010 presidential elections between opposition candidate and Sao Paulo state governor Jose Serra and President Luiz Inacio Lula da Silva's chosen successor, Dilma Rousseff, currently chief of staff.
Eletrobras is a federal holding company operating 39% of Brazil's total installed capacity. The company produces more than 39,000 megawatts. It operates the massive Itaipu hydroelectric power station, the largest in Brazil.
On Thursday, Eletrobras shares were trading up 2.26% to BRL37.53. Its preferred shares (ELET6.BR) were up 1.3% to BRL31.30. Both were outperforming the Ibovespa stock index, down 1.03% to 67,497 points in the early afternoon hours.
In New York, Eletrobras' ADRs were up 1.68% to $21.16.
-By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541, kenneth.rapoza@dowjones.com"
Friday, January 15, 2010
Banco do Brasil Sells $1 Billion of Bonds Overseas (Update2) - Bloomberg.com
Banco do Brasil Sells $1 Billion of Bonds Overseas
Jan. 15 (Bloomberg) -- Banco do Brasil SA, Latin America’s biggest bank, sold $1 billion of bonds in its second international dollar debt sale in three months.
The Brasilia-based bank issued $500 million of 10-year dollar bonds to yield about 2.38 percentage points above U.S. Treasuries and $500 million of five-year bonds to yield 2.2 percentage points more than Treasuries, according to Bloomberg data.
Banco do Brasil returned to the market after demand topped $14 billion for a bond sale in October, Chief Financial Officer Ivan de Souza Monteiro said in an interview last month. Today’s sale follows overseas debt issues by Banco Votorantim SA, Banco Industrial e Comercial SA and state development bank BNDES this month, part of an effort to boost lending in Latin America’s biggest economy.
“Brazilian banks have been very aggressive lending money in the local market,” said RBC Capital Markets analyst Eduardo Suarez, who is based in Toronto. “It’s a good time to get long- term financing to maintain their lending activity.”
Loan growth for Banco do Brasil and the banking industry will exceed 20 percent this year as the rebound in the country’s economy prompts companies and consumers to increase borrowing, Monteiro said.
The 8.5 percent perpetual bonds the bank sold in October yield about 3.83 percentage points over U.S. Treasuries due 2019, compared with an issue spread of 5.19 percentage points, according to data compiled by Bloomberg.
Banco do Brasil’s sale today is part of a push by emerging- market companies and governments to lock in lower borrowing costs before central banks begin raising interest rates.
Deutsche Bank AG, JPMorgan Chase & Co., BB Securities and Banco Votorantim arranged today’s transaction.
To contact the reporters on this story: Lester Pimentel at lpimentel1@bloomberg.net; Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net
Last Updated: January 15, 2010 14:59 EST"
Jan. 15 (Bloomberg) -- Banco do Brasil SA, Latin America’s biggest bank, sold $1 billion of bonds in its second international dollar debt sale in three months.
The Brasilia-based bank issued $500 million of 10-year dollar bonds to yield about 2.38 percentage points above U.S. Treasuries and $500 million of five-year bonds to yield 2.2 percentage points more than Treasuries, according to Bloomberg data.
Banco do Brasil returned to the market after demand topped $14 billion for a bond sale in October, Chief Financial Officer Ivan de Souza Monteiro said in an interview last month. Today’s sale follows overseas debt issues by Banco Votorantim SA, Banco Industrial e Comercial SA and state development bank BNDES this month, part of an effort to boost lending in Latin America’s biggest economy.
“Brazilian banks have been very aggressive lending money in the local market,” said RBC Capital Markets analyst Eduardo Suarez, who is based in Toronto. “It’s a good time to get long- term financing to maintain their lending activity.”
Loan growth for Banco do Brasil and the banking industry will exceed 20 percent this year as the rebound in the country’s economy prompts companies and consumers to increase borrowing, Monteiro said.
The 8.5 percent perpetual bonds the bank sold in October yield about 3.83 percentage points over U.S. Treasuries due 2019, compared with an issue spread of 5.19 percentage points, according to data compiled by Bloomberg.
Banco do Brasil’s sale today is part of a push by emerging- market companies and governments to lock in lower borrowing costs before central banks begin raising interest rates.
Deutsche Bank AG, JPMorgan Chase & Co., BB Securities and Banco Votorantim arranged today’s transaction.
To contact the reporters on this story: Lester Pimentel at lpimentel1@bloomberg.net; Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net
Last Updated: January 15, 2010 14:59 EST"
Tuesday, January 12, 2010
Banco do Brasil in Talks to Arrange 9 Billion Reais Dam Loan - Bloomberg.com
Banco do Brasil in Talks to Arrange 9 Billion Reais Dam Loan
Jan. 13 (Bloomberg) -- Banco do Brasil SA, Latin America’s largest lender by assets, has begun talks with banks and companies to arrange a loan of about 9 billion reais ($5.1 billion) to help finance construction of an Amazon dam project.
The bank is negotiating with five to six banks and with companies that may bid to build the Belo Monte hydroelectric dam, Sandro Marcondes, Banco do Brasil’s commercial director, said in a telephone interview from Brasilia. The companies include GDF Suez, Camargo Correa SA, Odebrecht SA, Cia. Energetica de Minas Energia, Neoenergia and Centrais Eletricas Brasileiras SA units Chesf and Eletronorte, he said.
“We are working with companies and Brazil’s state development bank to identify risks associated with the project,” Marcondes said.
BNDES, as the country’s state development bank is known, may also provide 12 billion reais in financing for the project, Marcondes said. Banco do Brasil estimates the 11,000-meagawatt hydroelectric dam may cost about 26 billion reais. The bank doesn’t have a final estimate for the project as Brazilian government hasn’t set the auction rules.
The state development bank will announce the terms of financing once the government sets the auction date, said a BNDES spokesman who declined be identified in accordance with the bank’s policy.
Dam Projects
Brazil will set the auction date for the Belo Monte dam after environmental agency Ibama grants a permit, Energy Minister Edison Lobao said in December. Ibama hasn’t said set a date to announce the license, said spokeswoman who declined to be indentified in accordance with agency policy.
Last year, BNDES lent 6.1 billion reais to a group of companies led by Odebrecht to build Jirau and 7.2 billion reais to GDF Suez and its partners for the construction of the Santo Antonio dam.
Odebrecht is considering bidding in the Belo Monte auction, a company’s spokeswoman said. Spokespeople at Eletrobras, as the Chesf and Eletronorte controlling shareholder is known, Cia. Energetica de Minas Energia, GDF Suez and Camargo Correa didn’t return calls seeking comment from Bloomberg News. A Neoenergia spokeswoman declined to comment.
To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net
Last Updated: January 12, 2010 21:00 EST
Jan. 13 (Bloomberg) -- Banco do Brasil SA, Latin America’s largest lender by assets, has begun talks with banks and companies to arrange a loan of about 9 billion reais ($5.1 billion) to help finance construction of an Amazon dam project.
The bank is negotiating with five to six banks and with companies that may bid to build the Belo Monte hydroelectric dam, Sandro Marcondes, Banco do Brasil’s commercial director, said in a telephone interview from Brasilia. The companies include GDF Suez, Camargo Correa SA, Odebrecht SA, Cia. Energetica de Minas Energia, Neoenergia and Centrais Eletricas Brasileiras SA units Chesf and Eletronorte, he said.
“We are working with companies and Brazil’s state development bank to identify risks associated with the project,” Marcondes said.
BNDES, as the country’s state development bank is known, may also provide 12 billion reais in financing for the project, Marcondes said. Banco do Brasil estimates the 11,000-meagawatt hydroelectric dam may cost about 26 billion reais. The bank doesn’t have a final estimate for the project as Brazilian government hasn’t set the auction rules.
The state development bank will announce the terms of financing once the government sets the auction date, said a BNDES spokesman who declined be identified in accordance with the bank’s policy.
Dam Projects
Brazil will set the auction date for the Belo Monte dam after environmental agency Ibama grants a permit, Energy Minister Edison Lobao said in December. Ibama hasn’t said set a date to announce the license, said spokeswoman who declined to be indentified in accordance with agency policy.
Last year, BNDES lent 6.1 billion reais to a group of companies led by Odebrecht to build Jirau and 7.2 billion reais to GDF Suez and its partners for the construction of the Santo Antonio dam.
Odebrecht is considering bidding in the Belo Monte auction, a company’s spokeswoman said. Spokespeople at Eletrobras, as the Chesf and Eletronorte controlling shareholder is known, Cia. Energetica de Minas Energia, GDF Suez and Camargo Correa didn’t return calls seeking comment from Bloomberg News. A Neoenergia spokeswoman declined to comment.
To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net
Last Updated: January 12, 2010 21:00 EST
Monday, January 11, 2010
Brazil to choose France's Rafale jet-govt source | Reuters
* Lula to choose French Rafale jets for Brazil fleet
* Brazil still seeking lower price for Rafale order
* Air force prefers Swedish plane
BRASILIA, Jan 11 (Reuters) - President Luiz Inacio Lula da Silva will choose the French-made Rafale jet as Brazil's next-generation fighter plane but wants to negotiate a lower price, a cabinet member told Reuters on Monday.
Lula will opt to buy 36 Rafale multi-role aircraft made by France's Dassault Aviation (AVMD.PA) despite the Brazilian Air Force's preference for the Gripen NG made by Sweden's Saab (SAABb.ST), said the minister, speaking on condition of anonymity.
'The government doesn't decide under pressure from anybody, not even the Air Force. The ball is in the court of the French,' said the minister, 'If they reduce the price, we'll close the deal soon.'
The Rafale is reported to have the highest price of the three finalists in the bidding process, which includes the Boeing Co (BA.N) F-18.
Last week local media reported the Air Force preferred the Gripen NG because it had a lower purchase and maintenance cost and would allow for more technology to be transferred to Brazil.
Lula's government said in September it was entering final negotiations with France to acquire the Rafale. Brazil has a strategic defense agreement with France worth billions of dollars, including the local assembly of helicopters and submarines.
Unlike the Rafale, which is a finished product, the Gripen NG would be developed with Brazilian participation, according to an Air Force report cited by local newspapers.
The deal, which could initially be worth more than $4 billion, has sparked fierce competition among aircraft manufacturers.
Latin America's largest country is seeking a generous technology transfer offer and local assembly. The deal could eventually rise to more than 100 aircraft.
Lula said last year that his final decision on which planes Brazil buys would be political rather than technical. (Writing by Raymond Colitt; editing by John Wallace)
By Natuza Nery
Mon Jan 11, 2010 2:49pm EST
Brazil to choose France's Rafale jet-govt source
* Brazil still seeking lower price for Rafale order
* Air force prefers Swedish plane
BRASILIA, Jan 11 (Reuters) - President Luiz Inacio Lula da Silva will choose the French-made Rafale jet as Brazil's next-generation fighter plane but wants to negotiate a lower price, a cabinet member told Reuters on Monday.
Lula will opt to buy 36 Rafale multi-role aircraft made by France's Dassault Aviation (AVMD.PA) despite the Brazilian Air Force's preference for the Gripen NG made by Sweden's Saab (SAABb.ST), said the minister, speaking on condition of anonymity.
'The government doesn't decide under pressure from anybody, not even the Air Force. The ball is in the court of the French,' said the minister, 'If they reduce the price, we'll close the deal soon.'
The Rafale is reported to have the highest price of the three finalists in the bidding process, which includes the Boeing Co (BA.N) F-18.
Last week local media reported the Air Force preferred the Gripen NG because it had a lower purchase and maintenance cost and would allow for more technology to be transferred to Brazil.
Lula's government said in September it was entering final negotiations with France to acquire the Rafale. Brazil has a strategic defense agreement with France worth billions of dollars, including the local assembly of helicopters and submarines.
Unlike the Rafale, which is a finished product, the Gripen NG would be developed with Brazilian participation, according to an Air Force report cited by local newspapers.
The deal, which could initially be worth more than $4 billion, has sparked fierce competition among aircraft manufacturers.
Latin America's largest country is seeking a generous technology transfer offer and local assembly. The deal could eventually rise to more than 100 aircraft.
Lula said last year that his final decision on which planes Brazil buys would be political rather than technical. (Writing by Raymond Colitt; editing by John Wallace)
By Natuza Nery
Mon Jan 11, 2010 2:49pm EST
Brazil to choose France's Rafale jet-govt source
Thursday, January 7, 2010
Brazil Carry-Trade Flows to Climb, StanChart Says
Jan. 7 (Bloomberg) -- Carry-trade investment flows into Brazil will climb this year as traders tap into central bank rate increases that will likely send benchmark borrowing costs above 10 percent, according to Standard Chartered Plc.
Carry trades, in which investors buy higher-yielding assets with money borrowed in nations with lower rates, will pick up as Brazil lifts the overnight interbank target from a record low of 8.75 percent to stem inflation as the economy rebounds, said Mike Moran, a senior currency strategist at Standard Chartered.
Moran, one of the most accurate forecasters in a Bloomberg survey of the real’s world-beating rally last year, predicts these flows will help the real advance to an 11-year high of 1.55 per dollar by year-end. That contrasts with the 1.75-per- dollar year-end call from BNP Paribas SA, the best Brazil real predictor last year among forecasts made at the end of 2008.
“We see stronger growth and higher rates boosting carry trades,” Moran said in a telephone interview from New York.
Carry trades, in which investors buy higher-yielding assets with money borrowed in nations with lower rates, will pick up as Brazil lifts the overnight interbank target from a record low of 8.75 percent to stem inflation as the economy rebounds, said Mike Moran, a senior currency strategist at Standard Chartered.
Moran, one of the most accurate forecasters in a Bloomberg survey of the real’s world-beating rally last year, predicts these flows will help the real advance to an 11-year high of 1.55 per dollar by year-end. That contrasts with the 1.75-per- dollar year-end call from BNP Paribas SA, the best Brazil real predictor last year among forecasts made at the end of 2008.
“We see stronger growth and higher rates boosting carry trades,” Moran said in a telephone interview from New York.
Wednesday, January 6, 2010
Gross Says Brazil Debt Attractive, Rates ‘Significantly High’ - Bloomberg.com
Gross Says Brazil Debt Attractive, Rates ‘Significantly High’ - Bloomberg.com
Jan. 6 (Bloomberg) -- Brazilian debt is “attractive” because the country’s inflation-adjusted interest rates are “significantly” higher than in the U.S., Bill Gross, manager of the world’s largest bond fund at Pacific Investment Management Co., said in an interview on CNBC.
“We still like selected emerging markets on the fixed- income side to the extent that some emerging markets, like Brazil, have significantly high real interest rates,” said Gross in the interview. “I’m talking about 4, 5, 6 percent higher than the U.S. That’s an attractive situation if the credit is an improving one. Certainly that’s the case in Brazil.”
Brazil’s zero-coupon local-currency bond maturing in July 2011 yielded 11.26 percent today, compared with its annual inflation rate of 4.2 percent in November. Yield on the benchmark two-year Treasury note was 1 percent today, compared with the inflation rate of 1.8 percent in the U.S.
To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net
Last Updated: January 6, 2010 15:46 EST"
Jan. 6 (Bloomberg) -- Brazilian debt is “attractive” because the country’s inflation-adjusted interest rates are “significantly” higher than in the U.S., Bill Gross, manager of the world’s largest bond fund at Pacific Investment Management Co., said in an interview on CNBC.
“We still like selected emerging markets on the fixed- income side to the extent that some emerging markets, like Brazil, have significantly high real interest rates,” said Gross in the interview. “I’m talking about 4, 5, 6 percent higher than the U.S. That’s an attractive situation if the credit is an improving one. Certainly that’s the case in Brazil.”
Brazil’s zero-coupon local-currency bond maturing in July 2011 yielded 11.26 percent today, compared with its annual inflation rate of 4.2 percent in November. Yield on the benchmark two-year Treasury note was 1 percent today, compared with the inflation rate of 1.8 percent in the U.S.
To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net
Last Updated: January 6, 2010 15:46 EST"
Tuesday, January 5, 2010
BNDES Sells $1 Billion of Bonds in Overseas Markets
Jan. 5 (Bloomberg) -- Brazil’s state development bank sold $1 billion of 10-year bonds today, marking the beginning of what analysts say will be a push by companies to secure financing ahead of October’s presidential election.
BNDES, as the bank is known, sold the bonds to yield 5.63 percent, or 187.5 basis points more than U.S. Treasuries. That yield spread is down from 300 basis points, or three percentage points, when it issued 10-year notes in its last overseas offering in June, according to data compiled by Bloomberg.
Rio de Janeiro-based BNDES is tapping debt markets before investors grow more cautious about buying the country’s corporate debt during the presidential campaign season, said Eric Ollom, chief strategist for emerging markets at Jefferies Group Inc. in New York.
“Brazil’s got a special case,” Ollom said. “For the six months of the year they have a very open window, but in the third quarter there’s going to be a lot of talk about the election. If I’m a Brazilian entity planning to sell debt, I’d rather do it sooner rather than later.” [more...]
BNDES, as the bank is known, sold the bonds to yield 5.63 percent, or 187.5 basis points more than U.S. Treasuries. That yield spread is down from 300 basis points, or three percentage points, when it issued 10-year notes in its last overseas offering in June, according to data compiled by Bloomberg.
Rio de Janeiro-based BNDES is tapping debt markets before investors grow more cautious about buying the country’s corporate debt during the presidential campaign season, said Eric Ollom, chief strategist for emerging markets at Jefferies Group Inc. in New York.
“Brazil’s got a special case,” Ollom said. “For the six months of the year they have a very open window, but in the third quarter there’s going to be a lot of talk about the election. If I’m a Brazilian entity planning to sell debt, I’d rather do it sooner rather than later.” [more...]
Brazil Air Force prefers Swedish jets-report | Reuters
Brazil Air Force prefers Swedish jets-report
BRASILIA, Jan 5 (Reuters) - The Brazilian Air Force would prefer to buy its next-generation fighter jets from Sweden, putting it at odds with President Luiz Inacio Lula da Silva's preference for French planes, media reported on Tuesday.
The deal, which could initially be worth more than $4 billion, has sparked fierce competition among aircraft manufacturers.
An Air Force report presented to Defense Minister Nelson Jobim said Sweden's Saab (SAABb.ST) had presented the best overall project among the three finalists, Folha de Sao Paulo newspaper reported on Tuesday.
The U.S.-made Boeing (BA.N) F18 was runner-up in the report, and France's Dassault Aviation (AVMD.PA) placed last with its Rafale jet.
The Brazilian government said last year that it was in the final stages of talks to acquire the Rafale.
Accused by critics of cutting short the bidding process, the government insisted no final decision had been made. Lula said he would have the final word and that his decision would be political and strategic.
Brazil has signed a strategic defense agreement with France worth billions of dollars, including the local assembly of helicopters and conventional and nuclear-powered submarines.
Brazil is seeking a generous technology transfer offer and local assembly as part of a contract to buy 36 jet fighters. The deal could eventually rise to more than 100 aircraft.
Saab's Gripen NG jet had a lower purchase and maintenance cost and would allow for more technology to be transferred to Brazil, Folha cited the Air Force report as saying.
Unlike the Rafale, which is a finished product, the Gripen NG would be developed with Brazilian participation, the Air Force said according to Folha.
The Veja news magazine reported this week that Jobim told friends there might not be a decision on the deal before he steps down in April to run for public office in October general elections.
For more than a decade, Brazil has been studying how to replace its aging fleet of fighter jets.
The Air Force declined to comment, and the defense ministry was not immediately available to comment. (Reporting by Raymond Colitt; Editing by Lisa Von Ahn)
Tue Jan 5, 2010 8:59am EST
BRASILIA, Jan 5 (Reuters) - The Brazilian Air Force would prefer to buy its next-generation fighter jets from Sweden, putting it at odds with President Luiz Inacio Lula da Silva's preference for French planes, media reported on Tuesday.
The deal, which could initially be worth more than $4 billion, has sparked fierce competition among aircraft manufacturers.
An Air Force report presented to Defense Minister Nelson Jobim said Sweden's Saab (SAABb.ST) had presented the best overall project among the three finalists, Folha de Sao Paulo newspaper reported on Tuesday.
The U.S.-made Boeing (BA.N) F18 was runner-up in the report, and France's Dassault Aviation (AVMD.PA) placed last with its Rafale jet.
The Brazilian government said last year that it was in the final stages of talks to acquire the Rafale.
Accused by critics of cutting short the bidding process, the government insisted no final decision had been made. Lula said he would have the final word and that his decision would be political and strategic.
Brazil has signed a strategic defense agreement with France worth billions of dollars, including the local assembly of helicopters and conventional and nuclear-powered submarines.
Brazil is seeking a generous technology transfer offer and local assembly as part of a contract to buy 36 jet fighters. The deal could eventually rise to more than 100 aircraft.
Saab's Gripen NG jet had a lower purchase and maintenance cost and would allow for more technology to be transferred to Brazil, Folha cited the Air Force report as saying.
Unlike the Rafale, which is a finished product, the Gripen NG would be developed with Brazilian participation, the Air Force said according to Folha.
The Veja news magazine reported this week that Jobim told friends there might not be a decision on the deal before he steps down in April to run for public office in October general elections.
For more than a decade, Brazil has been studying how to replace its aging fleet of fighter jets.
The Air Force declined to comment, and the defense ministry was not immediately available to comment. (Reporting by Raymond Colitt; Editing by Lisa Von Ahn)
Tue Jan 5, 2010 8:59am EST
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