Brazilian Markets

Plural Capital appoints Ex-BTG Partners Pereira, Guimarães

2011-09-11T07:30:00.000-04:00

Brazilian asset management company Plural Capital Ltda has appointed former BTG partners Evandro Pereira and Pedro Guimaraes as part of the plan to become a full-service investment bank, Bloomberg reported.
Plural Capital founded by two former Banco BTG Pactual SA executives, currently manages 600 million reais ($362 million).

It will have a banking license from an August deal to buy Banco Modal SA. The Brazilian asset management company is in advanced stages of communication to buy local brokerage Flow Corretora de Mercadorias, said some sources.
The Flow partners include Jorge Felipe “Pipo” Lemann, son of Brazilian billionaire and 3G Capital Inc partner Jorge Paulo Lemann , one of the owners of Anheuser InBev NV.
The competition is getting stronger for investment banking services in Brazil, the second largest developing economy after China, amid a surge in equity offerings and deals.
The companies founded by former Brazilian executives who left the investment banks handled around 25 mergers and acquisitions this year to date worth a combined $1.65 billion, the reports said.
Rodolfo Riechert and Andre Schwartz created Plural in November 2009 after leaving BTG, the Brazilian investment bank led by billionaire Andre Esteves. Plural’s plan to become an investment bank coincided with the end of a non-competition deal in July between BTG and its partners.
The Brazilian AMC will have an initial capital of about 400 million reais, said people familiar with the expansion plan. Plural Capital is a company providing investment management and financial advisory services.
It maintains high quality standards in all of its operations, be it IPO, transactions, financial structuring and advisory, mergers and acquisitions, or asset management and treasury operations in the domestic and international markets.

11 Sep 2011 Artika Shah

Largest Traders Bet Real Bulls to Beat Mantega

2011-05-23T10:14:00.001-04:00

The world’s largest currency traders are recommending their clients bet Brazilian Finance Minister Guido Mantega’s success in stemming gains in the real will be short-lived as foreign investment picks up.

Largest Traders Bet Real Bulls to Beat Mantega
To contact the editor responsible for this story: Laura Price in London at lprice3@bloomberg.net
By Laura Price - May 23, 2011 3:33 AM ET

Brazil Weighs Fuel Tax Cut to Slow Inflation, Augustin Says

2011-05-13T15:36:00.001-04:00

Brazil is considering cuts to a fuel tax as inflation exceeds the government’s target range for the first time in six years, Treasury Secretary Arno Augustin said.
“The government has tools to control fuel prices and avoid a negative impact,” Augustin said in an interview today in Brasilia, citing a tax known in Brazil as Cide. “Whatever the international scenario we have ways to avoid damaging the Brazilian economy. We have Cide and we can use it.”
President Dilma Rousseff’s administration is weighing cutting taxes on electricity as well, a person familiar with the discussions said yesterday. The person declined to be identified because he isn’t authorized to speak publicly about the issue.

Brazil’s annual inflation rate rose to 6.51 percent in the year through April, the first time the benchmark IPCA index has exceeded the upper limit of the target range since 2005. The central bank targets inflation of 4.5 percent, plus or minus two percentage points.
The government is relying on a mix of higher interest rates, measures to curb credit and spending cuts in its effort to contain inflation. Central bank President Alexandre Tombini yesterday said that policy makers will increase the overnight rate for a “sufficiently prolonged” period to ensure inflation slows to target next year.

Benchmark Rate

The central bank increased the benchmark interest rate to 12 percent from 11.75 percent in April, after lifting it by half a percentage point at each of its two previous meetings.
Petroleo Brasileiro SA (PETR4), the Brazilian state-owned oil company, yesterday said its fuel distribution unit is cutting gasoline prices by 6 percent.
Brazil’s policy of financing industry via the subsidized long-term interest rate offered by the state development bank known as BNDES helps fight inflation, Augustin said. BNDES lending doesn’t hinder monetary policy, he added.
August said the appreciating real is a “extremely big worry” for Latin America’s biggest economy. The real has strengthened 41 percent against the U.S. dollar since the start of 2009, the most among 25 emerging market currencies tracked by Bloomberg.

Brazil Weighs Fuel Tax Cut to Slow Inflation, Augustin Says

By Arnaldo Galvao and Carla Simoes - May 13, 2011 2:03 PM ET

Buy Brazil Inflation-Linked Bonds, Swiss & Global Says

2011-04-27T12:40:00.004-04:00

Brazilian inflation-linked bonds may appreciate as the country’s economy grows and its credit profile improves, according to Alessandro Ghidini from Swiss & Global Asset Management Ltd.

The real yield on inflation-linked bonds, whose principle is adjusted to compensate for consumer price rises, may fall by about 1 percentage point over the next year or so as the bonds rise in value,
Ghidini, who helps manage about $1.2 billion in emerging-market debt for Swiss & Global, said in a phone interview yesterday.

“Brazil is undergoing a tremendous improvement in terms of the economy, in terms of debt profile,” Ghidini said.

The fall in yields may occur across all maturities for Brazilian inflation-linked bonds, he said. A Brazilian government inflation-linked bond due in August 2030 yielded 6.4 percent on top of inflation today, according to data compiled by Bloomberg.

Brazil’s gross domestic product may expand by 4.5 percent this year and its gross government debt remain stable at about 66 percent of GDP, according to the International Monetary Fund’s World Economic Database in April.

The yield on Mexico’s 30-year inflation-linked bond may also fall to 3.7 percent or 3.6 percent from about 4 percent now, he said. Inflation-linked bonds from South Korea and Turkey were less attractive investments at current prices, he said.

To contact the reporter on this story: Jason Webb in London at jwebb25@bloomberg.net.

Buy Brazil Inflation-Linked Bonds, Swiss & Global Says
By Jason Webb - Apr 27, 2011 9:21 AM ET

Brazil Dollar Bonds Gain as Fitch Raises Rating to BBB From BBB-

2011-04-04T13:09:00.000-04:00

April 4 (Bloomberg) -- Brazil’s dollar bonds rose as Fitch Ratings raised the country’s rating to BBB from BBB-, citing the economy’s growth prospects.

The extra yield investors demand to own Brazilian bonds instead of U.S. Treasuries narrowed 1 basis point, or 0.01 percentage point, to 169, according to JPMorgan Chase & Co.

“Brazil’s medium-term growth trajectory is likely to remain relatively robust due to its domestic demand dynamics, which are underpinned by the country’s economic diversity, a large and growing middle class and a positive investment cycle,” Shelly Shetty, an analyst at Fitch, said in a statement.

To contact the editor responsible for this story: Lester Pimentel at lpimentel1@bloomberg.net

Brazil Dollar Bonds Gain as Fitch Raises Rating to BBB From BBB-
"April 04, 2011, 11:49 AM EDT"

Brazil Imposes 6% Tax on International Bonds Maturing in Up to One Year

2011-03-29T11:29:00.001-04:00

Brazilian President Dilma Rousseff raised taxes on corporate loans and debt sales abroad by banks in a bid to contain a 39 percent gain since the end of 2008. The real erased this year’s losses and yields on interest-rate futures rose.
Brazil imposed a tax of 6 percent on international bond sales and loans with an average minimum maturity of up to 360 days, according to a decree published today in the Official Gazette. Companies had paid a 5.38 percent tax on loans up to 90 days and zero tax when the operation exceeded three months.

“The measure will restrain foreign loans,” Luciano Rostagno, chief strategist at CM Capital Markets brokerage said. “We were having huge inflows from companies and banks and that partly explains why the central bank’s been trying other tools to fight inflation and avoid an appreciation of the currency.”
Countries across Latin America are buying dollars while nations including Brazil and South Korea raise taxes on foreign purchases of bonds to stem currency gains that hurt exporters. Finance Minister Guido Mantega said in September that Brazil is a victim of a “currency war” in which nations seek export advantages by competitively weakening their currencies.

Rising Real

The real erased this year’s losses, rising 0.4 percent to 1.6571 per the dollar at 11:01 a.m. New York time. Yields on interest-rate futures market rose for the five most traded contracts today. The yield on the contract maturing in January 2013, the most traded today in Sao Paulo BM&F Bovespa stock exchange, rose five basis points, or 0.05 percentage point to 12.78 percent.
A spokesman for the Finance Ministry wasn’t immediately available to comment when called by Bloomberg News.
The higher levy on foreign loans might help avoid a further appreciation of the real “in the short term” while failing in the medium term, Jankiel Santos, chief economist at Espirito Santo Investment Bank, said in a telephone interview.
“If the intention is an immediate containment of capital flows it might have some effectiveness,” Santos said. “In the medium term, a weak dollar in the world, strong economy in Brazil and interest rate differential will remain to stimulate the flow of currencies.”

Brazil inflation

Brazil’s inflation, as measured by the IPCA-15 consumer price index, quickened to 6.13 percent in the year through mid- March, the highest level since November 2008.
Higher taxes on foreign loans “won’t work” either to control inflation or weaken the currency, said former central bank President Carlos Langoni, director of the Getulio Vargas Foundation in Rio de Janeiro. Only raising interest rates will help cool inflation, he said.
The central bank has raised borrowing costs five times since last April, pushing the Selic to 11.75 percent, from 8.75 percent a year earlier. The benchmark interest rates in the U.S., Japan and Europe are no higher than 1 percent.
Central bank president Alexandre Tombini signaled last week that policy makers may adopt new measures to curb consumer credit growth as part of a group of measures to contain demand in Brazil.
The higher IOF tax on foreign loans will also reduce the credit available in the economy by reducing liquidity, in a move that may help contain inflation, Luiz Fernando Figueiredo, founder of Maua Investimento LTDA and a former central bank director, said at the Bloomberg Brazil Economic Summit in Sao Paulo today.

Tripled Tax

The government tripled a tax on foreign investors’ fixed- income purchases to 6 percent in October as part of the effort to stem gains in the real. The central bank has bought $18.8 billion dollars in the spot market, or 45 percent of the record amount it purchased last year. Additionally, the bank set reserve requirements on short dollar positions held by local banks in January and bought dollars in the futures market for the first time in 21 months.
At 5.7 percent, Brazil’s inflation-adjusted interest rate is the highest in the Group of 20 nations, according to data compiled by Bloomberg.
Brazil’s real has gained 39 percent against the U.S. dollar since the end of 2008, the most among 25 emerging market currencies tracked by Bloomberg.
“It’s not time to adopt currency measures -- the government should instead increase productivity by stimulating the import of capital goods,” Andre Perfeito, chief economist at Gradual Investimentos in Sao Paulo, said before the announcement. “The real is strengthening because Brazil is attracting capital and the country’s interest rates are high. New measures may keep investors away from the country.”

Olympic Investment

The efforts were dwarfed by increasing foreign investment as Latin America’s biggest economy builds roads and airports to host the 2014 World Cup and 2016 Olympics.
Net foreign-currency inflows to Brazil from trade and financial transactions amounted to $24.4 billion this year, exceeding the total amount in all of 2010, according to the central bank.
Foreign investment in Brazilian stocks and fixed-income assets fell 91.4 percent to $206 million in January from $2.39 billion in January 2010, according to the central bank. Foreign direct investment more than quadrupled over the same period, to $2.96 billion, from $600 million.
“We remain very skeptical that any new measures will have a substantial impact on the level of the Brazilian real,” Tony Volpon, a Latin America strategist at Nomura Securities in New York, wrote in a note to clients this month. “The major types of inflows seen in the market are investment-driven. This is the ‘good’ type of inflows that Brazil needs to grow, and we doubt very much that the government will do anything to curtail them.”
To contact the reporters on this story: Iuri Dantas in Brasilia at idantas@bloomberg.net; Mario Sergio Lima in Brasilia at mlima11@bloomberg.net
To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

Brazil Imposes 6% Tax on International Bonds Maturing in Up to One Year
By Iuri Dantas and Mario Sergio Lima - Mar 29, 2011 11:13 AM ET

Brazil Progress On Budget Cuts Central To Rating--Moody's

2011-03-26T20:57:00.006-04:00

CALGARY (Dow Jones)--Progress by Brazil's government on proposed spending cuts will be fundamental to determining changes in the country's credit rating outlook, Moody's Investor Services said Saturday.

Moody's, which in 2009 rated Brazil's credit rating to investment grade with a positive outlook, will decide in the second-quarter whether to change the outlook to "stable" or to put the rating in review for a possible upgrade.
In addition to considering the country's commitment to inflation targeting and Brazil's potential long-term growth rates, the ratings company will focus on what steps the government has taken to follow through on its promise to cut $30 billion from planned spending this year, Moody's senior analyst for Latin America Mauro Leos told Dow Jones Newswires.
"We will explore in the second quarter if there are sufficient elements in place to move to the next step," he said in Calgary, where he was attending the Inter-American Development Bank's annual meeting.
"At the end of the day, Brazil's fundamental issues are fiscal."
As inflation during the past 12-months climbs to 6.01% and threatens to break past the central bank's inflation target of 4.5% plus or minus 2 percentage points, the government has promised to cut 50 billion Brazilian reals ($30 billion) from planned spending this year.
But the specifics about where those cuts will come have yet to be fully divulged, with the government saying only that it won't reduce planned spending on infrastructure.
The decision on the credit rating "will be based on conversations we have with the government on how they intend to move in that direction," Leos said. "We want more detailed information about how this will happen, how will this be implemented, how soon, where they will make cuts."
While inflation concerns are important, Moody's likely won't delve too deeply on short-term inflation risks because the country has so far demonstrated its commitment to the inflation-targeting mechanism, Leos said.
Investors have accused the central bank of working too closely with the finance ministry, raising interest rates less than necessary to contain the Brazilian real's gain against the dollar. But Leos brushed off criticism of central bank president Alexandre Tombini for signaling that policy makers will try to bring inflation back to the center of the target in the longer term, instead of moving to bring rates to the center this year.
Coordination between the central bank and the finance ministry isn't necessarily negative, and represents a more balanced approach to controlling inflation and containing a strong currency, he said.
"It is clear that this coordination won't force the central bank to compromise its inflation targeting objective," he said.
-By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073; paulo.winterstein@dowjones.com

Brazil Progress On Budget Cuts Central To Rating--Moody's
MARCH 26, 2011, 8:36 P.M. ET

Brazil federal debt up in February on net issue

2011-03-24T16:12:00.001-04:00

* Federal public debt up 2.8 pct in February
* Net debt issuance totals 27.25 billion reais in February

BRASILIA, March 24 (Reuters) - Brazil's federal public debt rose in February as the government issued more debt than it redeemed and paid higher servicing costs, the national treasury said on Thursday.

The federal debt in marketable securities rose 2.82 percent over January to 1.59 trillion reais ($960 million), with net debt issuance at 27.25 billion reais and interest accumulated on the debt totaling 16.24 billion reais.

The share of fixed-rate bonds in February jumped to 34.72 percent of total issuances this year from 34.21 percent the month prior.

The share of inflation-linked bonds eased to 29.56 percent compared to 29.77 percent, while the proportion of securities indexed to the central bank's Selic lending rate BRCBMP=ECI rose to 35.99 percent from 35.79 percent the month prior.

Brazil's National Treasury aims to boost the share of fixed-rate bonds in its overall debt to reduce interest rate-related risk.

President Dilma Rousseff's government has pledged to lower Brazil's ratio of debt to gross domestic product by the end of her four-year term. Last month it announced a 50 billion reais cut to the 2011 budget, which it hopes will ease pressure on inflation and make way for lower borrowing costs.

The central bank earlier this month raised the Selic rate for the second time this year by 50 basis points to 11.75 percent.

($1=1.656 Brazilian reais)

(Reporting by Isabel Versiani; Writing by Raymond Colitt; Editing by Padraic Cassidy
Brazil federal debt up in February on net issue
Thu Mar 24, 2011 3:47pm EDT

Brazil Feb Tax Revenue Hits BRL64.14B, Up 9.84% Vs '10

2011-03-22T16:43:00.000-04:00

BRASILIA (Dow Jones)--Brazil's tax collection continued to rise at a strong pace in February on still-robust economic activity early in the year, the country's federal tax department reported Tuesday.

The government reported revenue rose 9.84% in real terms from February 2010, to 64.14 billion Brazilian reals ($38.63 billion).

According to the tax department, the result was the best on record for the month.
While the result was slightly above market estimates of around BRL63.6 billion, it was down 30.13% from BRL91.07 billion reported in January this year.
The February result brought tax collection for the year to date to BRL149.99 billion, up 14% from the same period last year.
The tax department Tuesday said heated retail sales, rising incomes and growing local profits helped contribute significantly to the result.
According to the latest data, collection of the IPI industrial-products tax on retail goods was up 17.5% in February over the same month last year to BRL774 million, while collection of the IPI on auto sales rose 89.5% to BRL485 million. Additionally, the IPI on imported goods rose 26.3% to BRL960 million.
Alongside tax on sales, personal income-tax collection was up 19.2% during the month to BRL774 million, while collection of corporate income tax rose 19.3% to BRL5.93 billion. Collection of the country's CSLL welfare tax on corporate net profits rose 11.8% to BRl3.36 billion.
In addition to ordinary February tax collection, the tax department Tuesday reported it collected BRL19.24 billion in social security revenue during the month.
Brazil collected a total of BRL826 billion in total tax revenue in 2010, up 9.85% in real terms from 2009.
-By Gerald Jeffris, Dow Jones Newswires; 5561-3335-0832; gerald.jeffris@dowjones.com

Brazil Feb Tax Revenue Hits BRL64.14B, Up 9.84% Vs '10

MARCH 22, 2011, 2:49 P.M. ET

Brazil, Colombia may be upgraded by summer-Moody's

2011-03-03T16:39:00.000-05:00

NEW YORK, March 3 (Reuters) - Moody's will decide whether to raise Brazil and Colombia's credit ratings before summer, while Peru is on a "steady path" for more upgrades in the next few years, analyst Patrick Esteruelas said on Thursday.
Brazil and Colombia both have a positive rating outlook from Moody's, and an upgrade would put Colombia in the coveted group of countries with an investment grade status.
Brazil's upgrade from its Baa3 rating will depend on the new government's ability to reverse a "spending binge" by former President Luiz Inacio Lula da Silva in 2010, Esteruelas said.

"Brazil suddenly has been emitting positive (fiscal) signals since the inauguration of (President Dilma) Rousseff," Esteruelas said in an event organized by the Andean-American associations in New York.
"But the jury is still out over the government willingness and capacity to implement this year's budget," he said.
Brazil last week announced a 50 billion reais ($30 billion) spending cut to its 2011 budget, as part of an effort to curb inflation.
Esteruelas said Moody's is "bullish" on Colombia's ability to address the obstacles to faster economic growth.
Unlike in Brazil and Peru, Colombia's economy has been growing at a more modest pace since Venezuela curbed imports from its neighbor, forcing Colombian exporters to look for alternative markets.
Peru, although currently with a stable rating outlook by Moody's, is on track for future upgrades due to its strong economic growth and responsible fiscal management, the analyst said.
Key for such upgrades will be the country's ability to improve the economic condition of its population in order to prevent the ascension of populist, anti-market candidates in this year's presidential elections. (Reporting by Walter Brandimarte; Editing by Andrew Hay)
Brazil, Colombia may be upgraded by summer-Moody's

Thu Mar 3, 2011 3:54pm EST
By Walter Brandimarte

Brazil’s Central Bank Says Increase to 11.75% Part of ‘Adjustment Process’

2011-03-03T14:45:00.001-05:00

Brazil’s central bank signaled it will raise the benchmark interest rate for a third straight meeting next month, after pushing borrowing costs yesterday to a two-year high to cool inflation.

Policy makers raised the overnight rate to 11.75 percent from 11.25 percent in a unanimous vote, saying the decision was the “continuation of the adjustment process.”

The move matched estimates of 44 of 51 analysts surveyed by Bloomberg. Seven economists had forecast the bank would step up the pace of tightening after a half-point rate increase in January.

Annual inflation in the $1.57 trillion economy has accelerated every month since August, prompting the bank to raise interest rates in January for the first time since July. The statement accompanying the decision suggests policy makers aren’t considering bigger rate increases to rein in the fastest inflation in more than two years, Gray Newman, chief Latin America economist for Morgan Stanley in New York, said.
“A month or so ago, a lot of market participants were expecting a much more aggressive hiking cycle,” Newman said in a phone interview from New York. “They could move by a half- point in April, then a quarter-point after that. But April could certainly be the last hike of the year.”
Newman forecast policy makers will increase rates to 12.50 percent by June.

Market View

Traders, on the other hand, are wagering policy makers may raise borrowing costs to as high as 13 percent by year-end, according to Bloomberg estimates based on interest rate futures.
The yield on interest rate futures contract maturing January 2012 fell two basis points to 12.51 percent at 10:43 a.m. New York time.
Brazil is relying on a mix of higher interest rates, spending cuts and measures to curb credit growth to cool inflation.
Bigger rate increases will fail to bring inflation back to target this year, said Jose Francisco de Lima Goncalves, chief economist at Banco Fator SA, who expects consumer prices to increase 4.6 percent next year.
“The short end of the yield curve should re-price the risk that the Banco Central do Brasil would step up the pace of hikes,” Marcelo Salomon, chief economist for Brazil at Barclays Plc, wrote in a note to clients yesterday. “The statement indicates to us that they have chosen not to.”

Prices

Inflation, as measured by the benchmark IPCA-15 index, accelerated to 6.08 percent in the year through mid-February, the fastest pace since December 2008. In the month through mid- February, prices rose 0.97 percent, the highest since April 2003.
Gross domestic product grew 0.7 percent in the fourth quarter from the previous quarter, compared with a revised 0.4 percent in the third quarter, the national statistics agency said today in Rio de Janeiro. The growth rate compares with the median forecast of 0.8 percent in a Bloomberg survey of 32 analysts.
“Following the process of adjustment of monetary conditions, the monetary policy committee decided, unanimously, to raise the rate to 11.75 percent a year, without a bias,” policy makers said in the one-sentence statement announcing their decision.
“The fact the statement was very short and clean signals policy makers will keep their plan of carrying out three 50 basis-point increases,” said Roberto Padovani, chief economist at Banco WestLB do Brasil. “The statement doesn’t signal any change to the strategy the central bank laid out when it started the hiking cycle”
Economists expect consumer prices to rise 5.8 percent this year before slowing to 4.78 percent next year, according to a central bank survey of about 100 analysts published this week.

‘Probably Insufficient’

The central bank targets inflation of 4.5 percent with a two percentage point leeway either side to accommodate for price shocks.
“This move is probably insufficient to reverse the recent sharp deterioration of inflation expectations, Alexandre Schwartsman, chief economist at Banco Santander SA in Sao Paulo, wrote in a note to clients after the rate decision. ‘‘The absence of any sense of urgency from the central bank should imply additional deterioration of inflation expectations.’’
Total outstanding credit in the Brazilian economy expanded in January at its slowest pace in almost two years after the central bank raised reserve and capital requirements in December to prevent a credit bubble.
The credit measures will have the same impact on inflation as a 0.75 percentage-point interest rate increase, according to a central bank survey of economists published Feb. 24.
President Dilma Rousseff’s government this week announced cuts to spending on defense, education, housing, subsidies to companies and farmers and payroll outlays as part of its plan to cut 50.1 billion reais ($30.2 billion) from this year’s budget.
To contact the reporters on this story: Matthew Bristow in Brasilia at mbristow5@bloomberg.net Andre Soliani in Brasilia at asoliani@bloomberg.net
To contact the editor responsible for this story: Bill Faries at wfaries@bloomberg.net
Brazil’s Central Bank Says Increase to 11.75% Part of ‘Adjustment Process’
By Matthew Bristow and Andre Soliani - Mar 3, 2011 9:15 AM ET

Brazil inflation forecast rises for 12th week-poll

2011-02-28T08:09:00.000-05:00

* forecast rose to 5.80 percent
Feb 28 (Reuters) - Economists raised their forecasts for the rise this year in Brazil's benchmark IPCA consumer price index for the 12th consecutive week, according to a weekly central bank survey.

Forecasts for the benchmark IPCA consumer price index [BRCPI=ECI], Brazil's most widely watched gauge of inflation, rose to 5.80 percent from 5.79 percent in the previous week, according to the survey published on Monday.
(Reporting by Guillermo Parra-Bernal, Editing by W Simon
Brazil inflation forecast rises for 12th week-

SAO PAULO | Mon Feb 28, 2011 6:26am EST

Brazil's tax revenue hits record high for January

2011-02-23T15:14:00.002-05:00

* Brazil posts record tax revenue in January
* Strong result due to industrial output, higher sales

BRASILIA, Feb 23 (Reuters) - Brazil posted record tax collection for January on the back of healthy industrial production and retail sales, the federal tax authority said on Wednesday.
Tax revenue in January, adjusted for inflation, jumped to 91.1 billion reais ($54.3 billion) an increase of 15.3 percent from a year earlier. Tax revenue in December totaled 90.9 billion reais.
Latin America's largest economy is expected to have grown more than 7 percent last year.
The tax authority attributed December's strong performance to strong industrial output compared to the previous year, increased retail sales as well as a rise in aggregate wages.
Brazil's public accounts deteriorated significantly in 2010 as the government increased spending ahead of October's presidential elections.
The country missed its main budget target with a consolidated primary surplus BRPSPS=ECI in the 12 months through December of 2.78 percent of gross domestic product, well below the goal of 3.1 percent of GDP for the year. For more see [ID:nN31206720].
The January primary surplus figure is due to be announced on Feb. 25.
The administration of the new president, Dilma Rousseff, announced budget cuts earlier this month of 50 billion reais in an effort to meet its budget target and help contain rising consumer prices. [ID:nN09134882]
Last month the tax authority said it expected an increase of 10 percent in tax revenue for 2011, not adjusted for inflation. ($1=1.675) (Reporting by Isabel Versiani; Writing by Raymond Colitt; Editing by Padraic Cassidy)
Brazil's tax revenue hits record high for January

Wed Feb 23, 2011 2:44pm EST

Brazil focused on real-denominated yield curve

2011-02-16T10:54:00.002-05:00

* Brazil to add liquidity to dollar-denominated benchmarks
* Aims to consolidate long-end of interest-rate curve

BRASILIA, Jan 21 (Reuters) - Brazil's government will make it a priority in 2011 to build a yield curve for its real-denominated global bonds, Deputy Treasury Secretary Paulo Valle said on Friday.

The move is part of a plan to build up a real-denominated debt market abroad, providing an alternative to capital inflows into Brazil, which have strengthened the local currency at the expense of local exporters.

With greater liquidity for the securities abroad, Brazilian corporate issuers would also be able to tap the market in reais BRBY, reducing their currency risk, Valle added.

'This year our priority will be to build a real-denominated yield curve in markets abroad, with the possible creation of new benchmarks between 10-year and 30-year maturities,' Valle said in the Thomson Reuters Trading Brazil chatroom.

He said the Treasury would also seek to add liquidity for its 10-year and 30-year dollar-denominated global bonds.

Brazil's National Treasury would also continue its strategy of building the long end of the interest rate curve, Valle said.

'The Treasury's main strategy is to create an interest rate curve with good liquidity to consolidate the long-end of the curve,' Vale said. (Reporting by Paula Laier; Writing by Elzio Barreto and Ana Nicolaci da Costa; Editing by Leslie Adler)

UPDATE 1-Brazil focused on real-denominated yield curve

Fri Jan 21, 2011 1:37pm EST

Brazil's Foreign Reserves Surpass $300 Bln For First Time Ever - WSJ.com

2011-02-10T12:44:00.001-05:00

"BRASILIA (Dow Jones)--Brazil's foreign reserves surpassed the $300 billion mark for the first time ever Wednesday according the country's central bank, seeing influence from recent heavy foreign exchange inflows and accelerated dollar buying by the institution.

The bank said foreign reserves Wednesday rose to $300.27 billion from $299.8 billion on Tuesday.

Brazil's foreign reserves have risen rapidly over recent years under the impact of heavy central bank dollar buying to control the appreciation of the country's currency, the real. The real has gained more than 30% against the dollar over the past 24 months in response to hefty incoming foreign investment.

Brazil's reserves had surpassed the $200 billion mark on June 26, 2008, having rising from less than $40 billion in 2002.

In January, the bank acquired nearly $8 billion from the local foreign exchange market following the inflow of foreign investment in the month totaling more than $15 billion.

Brazil currently ranks sixth among nations in accumulation of foreign reserves, coming behind other emerging market nations such as China, Taiwan and India.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, gerald.jeffris@dowjones.com

Brazil's Foreign Reserves Surpass $300 Bln For First Time Ever - WSJ.com:

FEBRUARY 10, 2011, 10:43 A.M. ET

Pragmatism draws Brazil closer to US | beyondbrics | FT.com

2011-02-08T16:29:00.001-05:00

A flood of manufactured imports from China has pushed Brazil into the same camp as the US in the global currency war, pitting it against its biggest trading partner. The move signals a broader swing towards pragmatism under Dilma Rousseff, Brazil’s new president. But as Jonathan Wheatley of beyondbrics argues, Brazil also needs to address long-standing problems that undermine business competitiveness.
see video below:

Pragmatism draws Brazil closer to US | beyondbrics | News and views on emerging markets from the Financial Times – FT.com

February 8, 2011 4:28 pm by beyondbrics

Options Bets Against Brazil ETF Jump to Highest in Three Years

2011-02-08T11:41:00.001-05:00

Options traders are placing more bearish bets against a U.S. exchange-traded fund tracking Brazil than any time in three years, as policy makers raise borrowing costs to tame inflation in Latin America’s biggest economy.

The ratio of put options to sell the iShares MSCI Brazil Index Fund versus calls to buy has jumped 60 percent in the past two months to 1.76 and on Feb. 3 reached 1.81, the highest level since January 2008. The last time it reached this level, the fund tracking 83 securities plunged 62 percent over the next 10 months. The fastest-growing bets are February $69 puts. The fund hasn’t closed below $69 since Aug. 31 and fell 1 percent to $71.32 yesterday.

Brazil’s Bovespa stock index is down 5.7 percent this year, compared with a 4.9 percent gain for the MSCI World Index. Policy makers said Jan. 19 that they are beginning a “process of adjustment” in rates along with measures to slow inflation as the economy grows by the most in more than two decades. Brazil’s benchmark interest rate was raised half a percentage point to 11.25 percent last month.

“Brazil is a worrisome market,” said Constance Hunter, managing director and chief economist at Aladdin Capital Management LLP in Stamford, Connecticut, which manages $13 billion. “The combination of high real interest rates and high inflation is going to put the brakes on the economy, and that will impact corporate earnings and the equity market.”

Open Interest

Open interest for put options has risen 26 percent since Jan. 24 to 760,771, while the number of calls has increased 21 percent to 432,623. The most widely owned contracts on the ETF are the January $65 puts. They have an open interest of 45,354 contracts, or 6 percent of all outstanding puts to sell the ETF. The fund’s last close below $65 was July 16.

February $69 puts, the fastest-growing wagers, have jumped by 16,715 since Jan. 24 to 19,514 contracts, which if exercised would give the right to sell 1.95 million shares. The next biggest gains were in the February $68 puts and February $67 puts, both of which increased by more than 14,000 contracts.

“There are some pretty large positions in the downside puts,” said Ophir Gottlieb, head of client services at Livevol Inc., a San Francisco-based provider of options market analytics. “The options market is reflecting more downside risk.”

Emerging-Market Outflows

Emerging-market ETFs are having their biggest-ever weekly outflows as clashes in Egypt and record world food prices heightened concern that inflation may spur social unrest and curb consumer spending. Investors pulled $4.6 billion from ETFs that track developing-nation stocks during the week ended Feb. 2, according to Bank of America Corp., which cited data compiled by research firm EPFR Global. Outflows from all emerging-market equity funds totaled $7.2 billion, the most since January 2008.

Citigroup Inc.’s Economic Surprise Index for emerging markets, a gauge of how much reports are exceeding the median economist estimates in Bloomberg News surveys, has dropped to 20 from almost 65 a year ago.

“Inflationary pressures are causing people to get a little jittery,” said Dave Lutz, head of ETF trading and strategy at Stifel Nicolaus & Co. in Baltimore. “A lot of people are getting behind U.S. equities and we’ve seen a big rotation out of emerging markets.”

Paring Bets

Withdrawals from ETFs signal hedge funds are paring bets on the fastest-growing nations, Morgan Stanley wrote in a Feb. 1 report. The MSCI Emerging Markets Index has dropped 2 percent this year as countries from Hungary to Indonesia raise interest rates to combat inflation.

Valuations for companies in Brazil’s benchmark index are down by almost half from last year’s peak. The Bovespa Index trades at 13.1 times earnings from the past year, compared with 16 for the MSCI World Index, according to data compiled by Bloomberg. That’s the lowest level for the Bovespa since May in relation to the global gauge.

The Brazil ETF, which is also known by its EWZ ticker symbol, has a record 172 million outstanding shares, up 14 percent from a year ago. The fund’s options ranked 20th for volume in the U.S. last year among about 3,700 stocks and indexes with listed contracts, according to the Options Clearing Corp. ETFs are listed on an exchange and change hands throughout the day like stocks.

“The main pressure on the market has been that the central bank is trying to cool the economy off,” said Greg Lesko, who helps oversee $800 million at New York-based Deltec Asset Management. “If they do slow down the economy, there will be certain companies that will have slower earnings growth that they might otherwise have had, which makes them less attractive.”

To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

Options Bets Against Brazil ETF Jump to Highest in Three Years
By Jeff Kearns and Cecile Vannucci - Feb 8, 2011 12:00 AM ET

Brazil Allows Sovereign Fund to Trade Currency Derivatives; Real Weakens

2011-01-10T10:52:00.003-05:00

The real fell 0.5 percent to 1.6925 per U.S. dollar at 10.59 a.m. in Sao Paulo. Photographer: Adriano Machado/Bloomberg

Brazil allowed its sovereign wealth fund to trade currency derivatives, signaling President Dilma Rousseff’s administration is ready to take additional measures to curb the rally in the real.

The Treasury, which manages the wealth fund, may sign an agreement with the central bank to carry out currency transactions in the spot and futures markets, according to a Sept. 17 decision published today in the Official Gazette.
The real fell 0.5 percent to 1.6925 per U.S. dollar at 10:59 a.m. in Sao Paulo (7:59 a.m. New York) as traders anticipate the government may step up intervention in the currency markets to prevent the real from appreciating, said Diego Donadio, strategist for Latin America at BNP Paribas.
“The government is clearly not comfortable with the level where the real is trading,” Donadio said in a telephone interview from Sao Paulo. “It is preparing the legal framework to intervene. The decision to act will hinge on the real’s exchange rate.”
Today’s announcement came after the central bank on Jan. 6 set reserve requirements on short dollar positions held by local banks in its third attempt since October to stem a currency rally that is making Brazilian exports more expensive.
Policy makers in Latin America are trying to stem currency gains as fast economic growth and low interest rates in rich nations attract capital inflows to the region. Finance Minister Guido Mantega said last week that Brazil’s government is ready to take new measures to prevent the dollar from “melting” and stem the real’s 37 percent rally against the dollar since 2009.
Futures Pressure
Mantega told the Financial Times in an interview published yesterday that pressure on the real is coming from the futures market and reiterated the government may take additional measures to prevent the currency from gaining.
The central bank declined to comment on possible agreements with the Treasury to carry out deals in the derivatives market, said a press officer who can’t be indentified because of internal policy. The Finance Ministry didn’t immediately respond to a request for comment from Bloomberg.
Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.
The real may weaken to 1.72 per U.S. dollar this week on fears the government will take additional measures, Donadio said. It could slip to 1.75 per U.S. dollar should policy makers step into the futures market, he said.
The central bank last sold reverse currency swaps, a contract equivalent to buying dollars in the futures market, in May 5, 2009, helping spark a 1 percent slide in the real that day. Under these contracts, the central bank pays investors the Brazilian overnight interbank rate, now at 10.75 percent, in reais and receives a fixed interest rate in dollars.
To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net
To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
By Andre Soliani - Jan 10, 2011 9:59 AM ET

Brazil Allows Sovereign Fund to Trade Currency Derivatives; Real Weakens

Brazil Sets Reserve Requirements for Currency Positions to Stem Real Rally

2011-01-06T16:21:00.003-05:00

Monetary Policy Director Aldo Mendes. Photographer: Sebastian Bravo/Bloomberg

Brazil’s central bank set reserve requirements on short dollar positions held by local banks in its third attempt since October to stem a rally in the currency. The real fell for a third consecutive day.
The new rules have the potential to reduce short positions in the dollar to $10 billion from $16.8 billion in December as banks seek to avoid paying reserve requirements on currency operations, Aldo Mendes, the central bank’s director of monetary policy told reporters in Brasilia.

Starting April 4, Brazilian banks will need to deposit in cash at the central bank 60 percent of their short positions in U.S. dollars above $3 billion or their capital base, whichever is smaller. The reserves will not earn interest, Mendes said.
“The international environment is challenging and generates the need to focus on financial stability,” central bank President Alexandre Tombini said. “The central bank takes measures when it decides to take it. This was the adequate moment.”
Policy makers in Latin America are trying to stem currency gains as fast economic growth and low interest rates in rich nations attract capital inflows to the region. Finance Minister Guido Mantega said this week that Brazil’s government is ready to take new measures to prevent the dollar from “melting” and stem the real’s 37 percent rally against the dollar since 2009.
Excessive Positions
Tombini said the short dollar positions were excessive relative to the size of the currency market, prompting the central bank to set the reserve requirements. He cautioned Brazilian companies, saying that in a floating regime the exchange rate can swing both ways and that high levels of international liquidity were unlikely to persist.
“This measure is probably the first of a series of moves that the new government will announce -- they will do what it takes to hold the real,” Marcelo Salomon, chief economist for Brazil at Barclays Plc in New York, said in a phone interview.
The measure could weaken the real in the short-term, though is unlikely to have a lasting effect, said Andre Perfeito, chief economist at Gradual Investimentos. The real’s appreciation is based on “fundamentals,” he said.
Since October, Brazil’s central bank has twice raised, to 6 percent, a tax foreigners must pay to buy fixed income and derivative assets. President Dilma Rousseff, in her inaugural address Jan. 1, pledged to protect the country “from the indiscriminate flow of speculative capital.”
Brazil’s real fell as much as 1.17 percent after the announcement before paring losses. The currency weakened 0.8 percent to 1.6869 per dollar. Yields on the interest rate futures contract due in January 2012 rose 1 basis point to 12.1 percent.
Latin America
Other emerging markets including Chile and Peru have stepped up their battle against the weak dollar in recent days.
Chile this week said it will buy $12 billion in the foreign-exchange market to weaken the peso, the region’s best- performing currency over the past six month. Peru’s central bank on Jan. 1 extended reserve requirements for banks to their overseas units to stem inflows increasing volatility in the sol.
‘Infinite’ Tools
Mantega said Jan. 4 that the government has an “infinite” number of tools at its disposal to affect the country’s exchange rate and support exporters hurt by the currency gains.
Brazil’s trade surplus narrowed 20 percent last year from 2009 as a stronger currency and the fastest economic growth in more than two decades fueled imports.
Perfeito said today’s move by the central bank shows that Rousseff’s top concern is preventing the real from strengthening further. The move raises the risk bank President Tombini won’t raise the benchmark Selic rate this month to control inflation running at a 23-month high, he said.
“Perhaps they won’t increase the Selic at the next meeting, because they are trying so hard to control the exchange rate,” Perfeito said. “That’s my worry right now.”
Traders are betting policy makers will raise the benchmark rate by 50 basis points, to 11.25 percent, at their Jan. 18-19 policy meeting, according to Bloomberg estimates based on interest rate futures contracts. Brazil’s real interest rates accounting for inflation, the highest in the Group of 20 nations, are a magnet for speculative capital, Mantega has said.
Inflation Jump
Brazilian consumer prices, as measured by the IPCA-15 index, jumped 5.79 percent in the 12 months through mid- December. That’s the highest inflation rate in almost two years.
Mendes said today’s move had no connection with monetary policy.
In 2009, Brazilian banks held $2.9 billion in long positions in dollars, swinging to $16.8 billion in short positions at the end of 2010, Mendes said.
“It’s bad for the economy when the system swings to one extreme,” Mendes said.
The measures are “prudential” and could spur dollar purchases that weaken the real and reduce the central bank’s daily dollar purchases, he added.
Nelson Barbosa, the Finance Ministry’s executive secretary, said today’s measures had been under consideration since 2008 and will reduce volatility in the foreign exchange market.
To contact the reporter on this story: Matthew Bristow in Brasilia at mbristow5@bloomberg.net; Andre Soliani in Brasilia at asoliani@bloomberg.net
To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
By Andre Soliani and Matthew Bristow - Jan 6, 2011 3:08 PM ET

Brazil Sets Reserve Requirements for Currency Positions to Stem Real Rally

Brazil Trade Surplus Fell 20% Last Year on Currency Gains, Economic Growth

2011-01-03T12:08:00.002-05:00

Brazil’s trade surplus shrank 20 percent last year, as domestic consumption boost imports and manufacturers cope with a real rally.

The trade surplus fell to $20.3 billion in 2010 from $25.3 billion in the previous year, the Trade Ministry said today. The December trade surplus was $5.4 billion. Economists expected a trade surplus of $4.5 billion last month, according to the median forecast from 12 economists surveyed by Bloomberg.

Foreign sales reached a record $201.9 billion last year, the ministry said. That’s an increase of 32 percent over the $153 billion sold abroad in 2009. Brazil’s imports were $181.6 billion in 2010 and $15.6 billion in December, the ministry said.

The real’s 5.01 percent gains against the U.S. dollar coupled with the fastest economic growth in more than two decades boosted imports to Latin America’s biggest economy last year.

Brazil tripled to 6 percent in October a tax on foreign purchases of fixed-income securities in a bid to contain the currency gains. The government may take new measures to curb the strength of the real, Finance Minister Guido Mantega said last week.

Brazil’s economy likely grew 7.3 percent last year, fueled by domestic demand, credit expansion and investments, the central bank said on its quarterly inflation report Dec. 22. Economists surveyed by the central bank expect GDP growth of 4.5 percent this year, according to a weekly survey released today.

Rising Real

Brazil’s real rose 0.4 percent to 1.6548 per U.S. dollar at 9:28 a.m. New York time. In the overnight interest-rate futures market, the yield on the contract due in January 2012, the most traded in Sao Paulo stock exchange today, fell one basis point to 12.03 percent. Contracts due in April 2013 fell 9 basis points to 12.2 percent.

After raising Brazil’s benchmark interest rate by two percentage points last year to 10.75 percent from a record low 8.75 percent to prevent “overheating,” policy makers kept borrowing costs unchanged for the third straight meeting last month.

Rate Increase

Brazil’s central bank signaled last month it may start increasing interest rates in January, after forecasting inflation will be faster than previously expected.

Policy makers raised their 2011 inflation forecast to 5 percent, up from 4.6 percent in September, according to the so- called reference scenario published in the bank’s quarterly inflation report.

The bank forecasts inflation will also exceed its 4.5 percent target in 2012, when consumer prices will rise 4.8 percent. The bank’s reference scenario assumes the benchmark interest rate remains unchanged.

Brazil’s current account deficit will widen to $64 billion in 2011, up from $49 billion in 2010, according to central bank estimates published Dec. 21. Previously the bank had seen the 2011 deficit at $60 billion.

To contact the reporter on this story: Iuri Dantas in Brasilia at at idantas@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

Brazil Trade Surplus Fell 20% Last Year on Currency Gains, Economic Growth

Brazil Interest Futures Rise on Central Bank Signal

2010-12-23T15:45:00.002-05:00

Brazil’s interest-rate futures yields on contracts due before July 2012 rose as the central bank’s signal that it will raise rates to curb price increases offset a report showing inflation quickened less than expected.

Investors increased bets the central bank will raise its benchmark Selic interest rate, with the yield on the contract due July 2011 adding 6 basis points to 11.65 percent by 6:38 a.m. New York time, the highest intraday level since Dec. 8. On the agreement due April, the yield advanced 4 basis points to 11.15 percent.

Consumer prices as measured by the IPC-S Index, which gauges inflation in the country’s 12 biggest cities, climbed 0.87 percent in the 30 days through Dec. 22, from 1.06 percent in the 30 days ended Dec. 15, according to a report by Fundacao Getulio Vargas. That’s less than the median estimate for a 0.94 percent advance by seven economists polled by Bloomberg.

Brazil’s central bank yesterday signaled it may start raising interest rates from next month after forecasting inflation next year will be faster than previously expected. Policy makers need to “contain the mismatch between the pace of expansion of domestic demand and the production capacity of the economy,” according to the central bank’s quarterly inflation report released yesterday.

‘Preparing Ground’

“The report prepared the ground for incoming central bank Governor Alexandre Tombini to raise the benchmark interest rate at his first meeting,” Andre Perfeito, chief economist at Gradual Investimentos, which manages 2 billion reais ($1.2 billion) of assets, said in a phone interview from Sao Paulo.

Policy makers kept the Selic rate unchanged at 10.75 percent for a third straight meeting on Dec. 8, saying they needed more time to gauge the impact of an increase on bank reserve requirements on the economy. Earlier this year, they increased the Selic rate by 200 basis points from a record low 8.75 percent.

Brazil’s real strengthened for a third day in four versus the U.S. dollar gaining 0.2 percent to 1.6977 from a close of 1.7003 yesterday.

The central bank will release data on lending by private banks in November and total outstanding loans at 10:30 a.m. local time.

To contact the reporter on the story: Josue Leonel in Sao Paulo at jleonel@bloomberg.net

To contact the editor responsible for this story: Francisco Marcelino at mdeoliveira@bloomberg.net Gavin Serkin at gserkin@bloomberg.net.

Brazil Interest Futures Rise on Central Bank Signal
By Josue Leonel - Dec 23, 2010 3:23 PM ET

Panamericano Posts Biggest Two-Day Drop Since Probe After Reserves Lifted

2010-12-09T17:19:00.006-05:00

Banco Cruzeiro do Sul SA sank 2.3 percent to 14.75 reais. Moody’s Investors Service cut their outlook on their Ba ratings to negative from stable for four Brazilian banks -- Banco BMG SA, Banco Cruzeiro do Sul, Banco Bonsucesso SA and Banco Schahin SA. Profits may be hurt after capital requirements were increased for long-term vehicle financing and loans deducted from payroll income, Moody’s wrote.

Banco Panamericano SA tumbled for the biggest two-day decline in almost a month on concern central bank measures to tighten liquidity will hurt profits, raise funding costs and slow consumer loan growth.

Panamericano, which focuses on auto, credit-card and payroll lending, sank 4.6 percent to 3.98 reais in the biggest two-day drop since the days after the central bank said last month it is investigating the company for alleged fraud in its accounting practices.

Brazil’s central bank said on Dec. 3 it raised reserve and capital requirements to slow consumer lending that’s growing 20 percent annually and to prevent a credit bubble. Banks also will be required to use more capital to back consumer loans that exceed 24 months.

“It’s a very delicate moment for smaller banks with the central bank being more careful with credit, and it’s just more dramatic with Panamericano because of all the questions regarding the investigation,” said Marco Aurelio Barbosa, an analyst at Coinvalores CCVM in Sao Paulo.

The central bank measures will likely require these banks to increase their costs to raise capital and may slow their loan growth because of “tighter liquidity,” the analysts wrote.

These banks’ “franchises may be negatively affected over the next months by the Brazilian central bank’s recently announced macro-prudential measures,” Moody’s analysts wrote.

Panamericano has plummeted 42 percent since Nov. 9 after regulators found accounting irregularities that sparked a 2.5 billion-real ($1.5 billion) rescue by controlling shareholder Grupo Silvio Santos, which was funded by the nation’s deposit insurance agency.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Investors To Pay $1.8B For 18.65% Stake In Brazil's BTG Pactual

2010-12-06T14:30:00.002-05:00

SAO PAULO (Dow Jones)--A group of investors including the sovereign wealth funds of China, Singapore and Abu Dhabi have agreed to pay $1.8 billion for an 18.65% stake in Brazilian investment bank BTG Pactual, the bank said Monday in a statement.

The Government of Singapore Investment Corporation, or GIC, China Investment Corporation, or CIC, Ontario Teachers' Pension Plan Board, Abu Dhabi Investment Council, or ADIC, J.C. Flowers & Co. LLC, RIT Capital Partners (RCP.LN), Grupo Santo Domingo, and the Rothschild, Agnelli and Motta families, joined with senior BTG managers to buy the stake, the company said.

After the deal goes through, BTG Pactual will have shareholders' equity of $4.3 billion, Pactual said.

Pactual will issue new shares to the investors, and none of the existing shareholders sold any shares as part of the deal, the bank said.

BTG Pactual said the deal would provide it with greater global reach, and the investment would be used to develop investment banking, asset management and wealth management services in Brazil and abroad.

-By Matthew Cowley, Dow Jones Newswires; +55 11 3544 7082; matthew.cowley@dowjones.com

Meirelles Dollar Loan Rates Top Libor by Most in Six Months

2010-09-15T12:54:00.008-04:00

Brazilian dollar-based loan rates are climbing to a six-month high relative to those overseas as central bank President Henrique Meirelles boosts purchases of the greenback to slow the real’s world-beating rally.

Contracts due in January known as cupom cambial, a measure of annual dollar borrowing costs in Brazil, rose to 1.89 percent on Sept. 13, the highest level since July 23. The rate has jumped 11 basis points, or 0.11 percentage point, since Sept. 8, when the central bank started holding two daily auctions to buy dollars, helping create a shortage of the U.S. currency in the Brazilian loan market.

The yield swelled this week to as wide as 160 basis points above the three-month dollar Libor rate, a gauge of interbank borrowing costs in international markets, marking the biggest differential since March. The gap is prompting investors to pour money into Brazil, spurring gains in the real that the central bank is seeking to avoid, according to Sao Paulo-based hedge fund M. Safra & Co. and London-based 4Cast Inc.

“The central bank is taking out all the dollars, generating pressure on cupom cambial,” said Guilherme Figueiredo, who oversees $1.3 billion as director at M. Safra. “What they are doing is producing a distortion in the local dollar curve.”
Record Deficit

The real has surged 5.3 percent against the dollar in the past four months, extending its rally since the end of 2008 to 35 percent, the most among all currencies tracked by Bloomberg. Meirelles, who is looking to stem the gains and shore up exports as Brazil’s current account deficit swells to a record, will likely shift tactics and begin buying dollars in the futures market to push cupom cambial rates back down, Figueiredo said.

Brazil sold $50 million of bonds due in 2041 in Asia today after selling $500 million of the securities in Europe and the U.S. yesterday to yield 5.2 percent, or 142 basis points more than U.S. Treasuries. The government first sold the 2041 bonds in September 2009, issuing $1.28 billion at a yield of 5.8 percent.
Central bank officials called currency traders on July 23 to gauge demand for so-called reverse currency swaps, which allow policy makers to buy dollars in the futures market, according to BNP Paribas and Nomura Securities International Inc. Under the contracts, the central bank pays investors the Brazilian overnight interbank rate, now at 10.75 percent, in reais and receives the cupom cambial rate in dollars.
Policy makers last sold the contracts on May 5, 2009, helping spark a 1 percent slide in the real that day.
“The central bank doesn’t comment on possible future actions,” the bank said in an e-mailed response to questions.
Bond Sale
Brazil’s real touched a nine-month high of 1.7031 per dollar yesterday as traders prepared for a surge in dollar supply from foreigners participating in a $32 billion share offering by state-run Petroleo Brasileiro SA. The rally helped swell Brazil’s annual current account deficit, the broadest measure of trade in goods and services, to $43.8 billion in July from $18 billion in the year-earlier period. The real traded at 1.7104 per dollar today.
In the futures market, international investors boosted their bullish bets on the currency to a two-year high on Aug. 31, making 151,847 more wagers on the real gaining than falling, data from the BM&FBovespa SA exchange in Sao Paulo show. The wagers declined to 135,748 yesterday.
“The pressure is in the futures market,” said Pedro Tuesta, a senior economist for Latin America at 4Cast in Washington. “The central bank has to act in the futures market.”
‘First Line’
The extra yield investors demand to own Brazilian dollar- bonds instead of Treasuries fell six basis points today to 209, according to JPMorgan Chase & Co. indexes.
The cost of protecting Brazilian bonds against default for five years held at 120 basis points yesterday, according to CMA DataVision prices. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
Yields on the interbank rate futures contract due in January held at 10.66 percent today, indicating traders expect the central bank will keep its benchmark rate at 10.75 percent through year-end. The benchmark rate in the U.S., U.K., Japan and the euro-zone is no more than 1 percent.
Central bankers have held two auctions to buy dollars in the foreign-exchange market each day since Sept. 8 after buying $18.6 billion in the first eight months of the year, up from the $7.3 billion they purchased in the year-earlier period, according to the bank’s website.
Finance Minister Guido Mantega told investors in a Sept. 9 speech in Recife that he wouldn’t “allow” the real to keep gaining. The government imposed a 2 percent tax on foreigners’ investment in stocks and bonds in October, helping prevent the real from strengthening beyond 1.7 per dollar this year.
“The spot market intervention is their first line of defense,” said Figueiredo at M. Safra. “We are getting closer and closer to the point that they will step in the futures market.”
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net;

BNDES Sells 750 Million Euros of 7-Year Notes to Yield 4.243%

2010-09-09T13:25:00.000-04:00

Sept. 9 (Bloomberg) -- Brazil’s state development bank, known as BNDES, sold 750 million euros of seven-year bonds, according to a person familiar with the offering.

The notes priced to yield 4.243 percent, or 200 basis points over the benchmark mid-swap rate,

said the person, who wasn’t authorized to comment on the sale. A basis point is 0.01 percentage point. BNP Paribas SA, Credit Suisse Group AG and Deutsche Bank AG arranged the sale, the person said.

To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net
To contact the editor responsible for this story: Lester Pimentel at lpimentel1@bloomberg.net

Brazilian Inflation Slows to Government Target For First Time This Year

2010-09-09T11:15:00.000-04:00

Brazil’s consumer prices rose less than expected in August, falling under the mid-point of the government’s target for the first time this year, the national statistics agency said.
Inflation in Latin America’s biggest economy slowed to 0.04 percent in August from July, less than the 0.08 forecast by 37 analysts surveyed by Bloomberg, the national statistics agency said in a report distributed in Rio de Janeiro today. Annual inflation through August slowed to 4.49 percent, less than the 4.53 percent forecast in the survey.

The yields on interest rate future contracts declined. The yield on the contract due January 2012, the most traded on the Sao Paulo BM&F futures exchange, fell 6 basis points to 11.3 percent at 8:08 a.m. New York time. The real was little changed at 1.7234 per dollar.

Policy makers last week kept the benchmark interest rate unchanged after three consecutive increases, saying the Selic was at an “adequate” level to ensure inflation would slow to target. The central bank’s President Henrique Meirelles said Sept. 3 that he is “comfortable” with the pace of economic expansion that slowed less than expected in the second quarter on a record investment surge.

Brazil’s central bank targets 4.5 percent inflation, plus or minus two percentage points.
Traders expect policy makers to raise the rate to 12 percent by September 2011, according to Bloomberg estimates based on interest rate futures contracts.

Brazil’s gross domestic product grew 1.2 percent in the three months ending in June from the previous quarter, cooling from a 2.7 percent expansion in the first quarter. GDP jumped 8.8 percent from a year ago compared with a 9 percent expansion in the first quarter that was the fastest pace in 15 years.

Brazil’s growth will slow to a level consistent with long- term equilibrium, Meirelles said last week, adding that he’s “comfortable” with the current pace. GDP will increase by an average of 0.7 percent over the third and fourth quarters, Meirelles said.
Brazilian economists expect inflation to end this and next year above the government’s 4.5 percent target, according to a weekly central bank survey of about 100 analysts published this week. The IPCA index may rise 5.07 percent this year, slowing to 4.85 percent in 2011, the survey showed.
To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net; Iuri Dantas in Brasilia at idantas@bloomberg.net

Lula May Offer Real-Linked Bonds Overseas as Yields Tumble

2010-09-02T12:48:00.001-04:00

Brazil is considering selling its first real-linked bonds in international markets in three years as yields on the securities fall to the lowest since May relative to local debt.

The government’s international real bonds maturing in 2022 yield 250 basis points, or 2.5 percentage points, less than its domestic real debt maturing in 2021, according to data compiled by Bloomberg. The difference was 184 basis points on July 1. Deputy Treasury Secretary Paulo Valle said yesterday that it’s “very probable” the government will sell foreign bonds denominated in either reais or dollars by year-end.

The yield gap between local and foreign real bonds is widening as international investors seeking alternatives to near-record low rates in the U.S., Japan and Europe pile into Brazil’s real debt issued in overseas markets. Foreigners prefer to buy the international securities because they can trade them more easily and don’t have to pay local taxes, according to Morgan Stanley.

“It’s a fantastic opportunity to issue debt in your own currency in the external market now,” said Silvia Marengo, who manages Latin American debt with Falcon Private Bank in Zurich. “It makes a lot of sense from the government’s perspective.”

The yield on the international real bonds due in 2022 has plunged 131 basis points in the past two months to 9.13 percent. Yields on the 2021 real bonds issued in the local market dropped 65 basis points over that time to 11.63 percent. The gap between the two reached 255 basis points on Aug. 27, the widest since May 7.

U.S., Japan
“In the short term, the gap will increase further simply because there’s a differential between rates in the developed world and the world of emerging markets and Brazil is the most attractive,” Vitali Meschoulam, an emerging-market strategist at Morgan Stanley, said in a telephone interview from New York. “It will widen a bit more, but not much.”
The 9.17 percent yield on Brazil’s international real- linked bonds is 670 basis points more than the 2.57 percent yield on benchmark 10-year U.S. Treasuries. Rates on two-year Treasuries touched a record low of 0.45 percent on Aug. 24 while yields on Japan’s 10-year notes declined to a seven-year low of 0.91 percent the following day after evidence mounted that the global economic expansion is slowing.
Sales of existing houses in the U.S. plunged by a record 27 percent in July as weekly jobless claims in August reached the highest level since November. In Japan, policy makers expanded a bank-loan program by 10 trillion yen ($118.7 billion) in an emergency meeting on Aug. 30 as a strong yen threatens to derail its economic recovery.
Brazil Growth
Latin America’s biggest economy, by contrast, is growing at its fastest pace in 15 years, prompting the central bank to boost the benchmark lending rate to 10.75 percent from a record low 8.75 percent in April. Central bankers left the rate unchanged at a policy meeting yesterday, saying it’s at a level that will bring inflation to the government’s 4.5 percent target. Consumer prices rose 4.6 percent in the 12 months through July.
Brazil’s gross domestic product will expand 7.1 percent this year after growing 9 percent in the first quarter, according to a central bank survey of about 100 economists released on Aug. 30.
The extra yield investors demand to own Brazilian dollar- bonds instead of U.S. Treasuries fell three basis points to 218 today at 9:44 a.m. New York time, according to JPMorgan Chase & Co. indexes.
The cost of protecting Brazilian bonds against default for five years narrowed seven basis points to 124 yesterday, according to CMA DataVision prices. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
2007 Sale
Yields on the interbank rate futures contract due in January fell two basis points to 10.67 percent today. Contracts maturing in 2012 implied that traders forecast policy makers will resume rate increases next year, bringing the benchmark rate to about 12 percent by the end of 2011, according to data compiled by Bloomberg. The real gained 0.3 percent to 1.7403 per dollar, paring its decline this year to 0.2 percent.
President Luiz Inacio Lula da Silva’s administration last sold real bonds abroad in June 2007, issuing $393 million of securities due in 2028 to yield 8.63 percent. The bonds yielded 9.05 percent yesterday.
‘Too Early’
“It’s very probable that in the second half we access the international market again,” the Treasury’s Valle said in a telephone interview from Brasilia yesterday. “It’s too early” to say whether the bonds will be denominated in reais or dollars, he said.
Valle echoed comments made by Treasury Secretary Arno Augustin in an Aug. 18 interview in Brasilia. Brazil last sold dollar-denominated bonds abroad on July 27, issuing $750 million of securities due in 2021 to yield 4.55 percent.
The government has 10.5 billion reais of real-linked bonds outstanding in international markets, according to the Treasury. Its domestic debt totaled 1.5 trillion reais at the end of July.
Selling the debt abroad “is cheaper than issuing in the local curve,” said Jerry Brewin, who manages $2 billion of emerging-market assets at Aviva Investors in London. “It also taps into a client base that’s not in competition with its local debt curve. It’s diversifying the source of customers.”
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net

Brazil's Central Bank Keeps Rate at 10.75% as Inflation Slows Below Target

2010-09-01T22:45:00.003-04:00

Brazil’s central bank kept its benchmark interest rate unchanged at 10.75 percent after inflation slowed below target and as the global economic recovery falters.

The policy board’s pause, after three straight increases, matched the forecast of 46 of 57 economists surveyed by Bloomberg. Seven economists predicted a quarter-point increase, and four anticipated a half-point rise, betting that higher borrowing costs will be needed to prevent a rebound in inflation next year.

Today’s decision, made at the last policy meeting before October’s presidential election, could be the start of a six- month pause in interest rates, said Silvio Campos Neto, chief economist at Banco Schahin SA.

“The committee is waiting for new signs, because uncertainty is very high,” Campos Neto said from Sao Paulo.
Lower-than-forecast inflation in August and a “bearish” outlook for third-quarter growth mean the bank is taking a wait- and-see approach before raising rates any further, said Nick Chamie, global head of emerging-markets research at RBC Capital Markets in Toronto, a unit of Canada’s biggest bank.
“They could very well start hiking again next year if domestic demand and wage growth remain as hot as they are,” Chamie said in an interview.
Inflation Outlook
After growing at its fastest pace in 15 years in the first quarter, Latin America’s biggest economy has cooled, bringing consumer prices in August below the midpoint of the government’s target of 4.5 percent plus or minus two percentage points for the first time since January.
The bank’s board “does not expect the inflation levels registered in recent months to remain in the near future,” according to a statement accompanying the decision. Still, it said, “The process of reduction of risks in the inflationary scenario since its second-to-last meeting is continuing.”
The difference between yields on the overnight interest rate futures contract due in January 2011 and 2013 suggest that some traders are speculating that the bank will need to resume rate increases in the months ahead.
The spread between the contracts’ yields rose to 88 basis points today, or 0.88 percentage point, up from 53 basis points on Aug. 24. The real strengthened 0.6 percent to 1.7456 per dollar.
Central bank President Henrique Meirelles said Aug. 18 that growth will heat up again in the third quarter.
Bank Signals
“There will be a recovery -- the question is to what level of activity and inflation,” Meirelles said in an interview with GloboNews TV network. “The central bank cannot signal what it doesn’t know.”
Brazil’s $1.57 trillion economy may have expanded 0.5 percent to 1 percent in the second quarter, Finance Minister Guido Mantega said this week. Growth will accelerate to an annual rate of 6.5 percent to 7 percent by year-end, he added.
Analysts predict the economy expanded 0.8 percent in the second quarter from the first quarter, according to the median estimate in a Bloomberg survey of 40 analysts. The country’s statistics agency releases the data on Sept. 3.
Brazil’s central bank has expressed concern about the outlook for the global economy, and data from the U.S. seem to indicate a prolonged period of low growth, said Virgilio Castro Cunha, head of fixed income strategy at Bank of America Corp. in Sao Paulo.
World Rates
“We’re living in a new world that will work with low real interest rates for a long time, making it more comfortable for investors in Brazil,” Cunha said.
Brazil’s consumer prices unexpectedly fell in the month through mid-August, pushing the annual inflation rate to 4.44 percent, down from 5.22 percent in mid-April.
Even as 2010 inflation expectations fall, forecasts for 2011 have increased to 4.87 percent, from 4.8 percent four weeks ago, according to a central bank survey of about 100 economists published this week.
There is a political risk premium on bonds maturing after 2010, due to uncertainty among traders about whether a government led by Dilma Rousseff might tolerate higher levels of inflation, said Roberto Padovani, chief economist at Banco WestLB do Brasil SA.
Dilma Rousseff, former Cabinet chief and President Luiz Inacio Lula da Silva’s chosen successor, has a 24 percentage point lead over opposition candidate Jose Serra, according to an Ibope poll published Aug. 28.
Rousseff, on the campaign trail, said she wouldn’t reduce the government’s inflation target if elected. In an interview this week with TV Globo, she said it was a “crime” to defend spending cuts.
Meirelles, who has served as the bank’s president since 2003, has vowed to step down when a new government takes office Jan. 1.
“She’s not that hawkish in terms of fiscal or monetary policy,” Padovani said, speaking by telephone from Sao Paulo.
To contact the reporter on this story: Matthew Bristow in Brasilia at mbristow5@bloomberg.net. Iuri Dantas in Brasilia at idantas@bloomberg.net

Brazil May Pause at 10.75% on Below-Target Inflation, Slower Global Growth

2010-09-01T15:40:00.004-04:00

Brazil’s central bank will probably keep its benchmark interest rate unchanged today after three straight increases as inflation has slowed below target and the global economic recovery falters.
Policy makers, meeting for the last time before October’s presidential election, will hold the benchmark rate at 10.75 percent, according to 46 of 57 economists surveyed by Bloomberg. Seven economists forecast a quarter-point increase, and four expect a half-point rise, betting higher borrowing costs are needed to prevent a rebound in inflation next year.

Since growing at the fastest pace in 15 years in the first quarter, Latin America’s biggest economy has slowed, bringing consumer prices in August below the government’s target for the first time since January. With slower growth curbing inflation, the bank is likely to take a wait-and-see approach to better gauge whether the global recovery has stalled, said Marina Santos, chief economist at Squanto Investimentos in Sao Paulo.

“They don’t know, we don’t know, and nor does Bernanke,” Santos, who expects the central bank to hold rates this week, said in an interview. “It’s better to wait than risk over- tightening at a moment of global uncertainty.” Santos was one of three analysts among 51 surveyed by Bloomberg in July who correctly predicted the bank’s unexpected half-point rate rise.

Traders’ Bets
By the time the bank meets again after the Oct. 3 elections, policy makers may have a better sense of both the vigor of the global economy and domestic inflation, Santos said.
The difference between yields on the overnight interest rate futures contract due in January 2011 and 2013 suggest that some traders are speculating that the bank will need to resume rate increases in the months ahead.
The spread between the contracts’ yields rose to 90 basis points today at 1:07 p.m. New York time, or 0.9 percentage point, up from 53 basis points on Aug. 24. The real strengthened 0.8 percent to 1.7420 per dollar.
The bank will probably resume raising rates early in 2011 as slower global growth won’t be enough to hold inflation to the bank’s target of 4.5 percent, plus or minus two percentage points, said Jankiel Santos, chief economist at Banco Espirito Santo de Investimento.
Policy makers will probably implement a last 0.25 percent increase in tomorrow’s meeting to anchor inflation expectations on a downward path, Santos said.
Pace of Recovery
Central bank President Henrique Meirelles said Aug. 18 that growth will heat up again in the third quarter.
“There will be a recovery -- the question is to what level of activity and inflation,” Meirelles said in an interview with GloboNews TV network. “The central bank cannot signal what it doesn’t know.”
Meirelles, who has served as the bank’s president since 2003, has vowed to step down when a new government takes office on Jan. 1.
Dilma Rousseff, former cabinet chief and President Luiz Inacio Lula da Silva’s chosen successor, has a 24 percentage point lead over opposition candidate Jose Serra, according to an Ibope poll published Aug. 28. With 51 percent support, Rousseff would win in the first round, according to the poll.
Brazil’s $1.57 trillion economy may have expanded 0.5 percent to 1 percent in the second quarter, Finance Minister Guido Mantega said this week. Growth will accelerate to an annual rate of 6.5 percent to 7 percent by year-end, he added.
Analysts predict the economy expanded 0.8 percent from the first quarter, according to the median estimate in a Bloomberg survey of 40 analysts. The country’s statistics agency releases its second-quarter gross domestic product report on Sept. 3.
New World
Brazil’s central bank has expressed concern about the outlook for the global economy, and data from the U.S. seem to indicate a prolonged period of low growth, said Virgilio Castro Cunha, head of fixed income strategy at Bank of America Corp. in Sao Paulo.
“We’re living in a new world that will work with low real interest rates for a long time, making it more comfortable for investors in Brazil,” said Cunha, who predicts the Selic will remain unchanged this week.
Brazil’s consumer prices unexpectedly fell in the month through mid-August, pushing the annual rate to 4.44 percent, down from 5.22 percent in mid-April.
Even as 2010 inflation expectations fall, forecasts for 2011 have increased to 4.87 percent, from 4.8 percent four weeks ago, according to a central bank survey of about 100 economists published this week.
Political Risk
There is a political risk premium on bonds maturing after 2010, due to uncertainty among traders whether a Rousseff government might tolerate higher levels of inflation, said Roberto Padovani, chief economist at Banco WestLB do Brasil SA.
Rousseff, on the campaign trail, said she wouldn’t reduce the government’s inflation target if elected. In an interview this week with TV Globo, she said it was a “crime” to defend spending cuts.
“She’s not that hawkish in terms of fiscal or monetary policy,” Padovani said, speaking by telephone from Sao Paulo.
To contact the reporter on this story: Matthew Bristow in Bogota at mbristow5@bloomberg.net. Iuri Dantas in Brasilia at idantas@bloomberg.net

Greenspan Conundrum Is Lula's Gain as Long-Term Yields Sink

2010-08-29T23:14:00.001-04:00

The biggest foreign purchases of Brazilian local bonds in three years are pushing longer-term borrowing costs below yields on two-year debt for the first time since October 2008.
Yields on fixed-rate government bonds due in 2017 have declined 106 basis points, or 1.06 percentage points, in the past three months to 11.49 percent. The plunge in 2017 yields put them as much as eight basis points below yields on notes maturing in 2012 last week. A year ago, longer bonds yielded 171 basis points more than the shorter-term securities.

Record low yields in the U.S. and Europe spurred foreigners to buy a net $16 billion of Brazilian bonds from January through July, compared with $9.1 billion for all of 2009, according to the central bank. International investors are piling into longer-term debt, helping trim President Luiz Inacio Lula da Silva’s borrowing costs, in part as a bet slowing inflation will push down rates in coming years, according to Citigroup Inc.

“We are seeing relentless inflows,” Dirk Willer, head of Latin America local markets strategy at Citigroup in New York, said in a telephone interview. “Some of the investors are betting on the convergence trade.”

Brazil’s so-called inverted yield curve is similar to the “conundrum” that former Federal Reserve Chairman Alan Greenspan said he faced in 2005, according to Marcelo Saddi Castro, who oversees 18 billion reais ($10.3 billion) as chief investment officer at SulAmerica Investimentos in Sao Paulo.
Rate Increases
That February, Greenspan said in a speech that he was puzzled by a decline in long-term bond yields even after he boosted the benchmark overnight rate six times in eight months. Brazilian long-term yields are declining after central bank President Henrique Meirelles boosted the interbank rate to 10.75 percent from a record low 8.75 percent in April to cool growth.
Like foreigners’ purchases are pushing down Brazilian long- term rates now, yields on 10-year Treasuries sank then as countries from China to Saudi Arabia invested cash from trade surpluses in long-term U.S. debt.
“An inverted curve is not something common in Brazil,” Saddi Castro said in a telephone interview. “There’s huge liquidity in the markets and you have a strengthening of flows from foreigners, which was exactly what happened in the U.S. There are some similarities.”
Overseas investors increased their holdings of Brazilian domestic debt to a record 9.5 percent of the total in July from 6.1 percent a year earlier, according to Fernando Garrido, head of the government’s Public Debt Operations Department. Foreigners “prefer” bonds maturing in at least four years, Garrido said in a telephone interview on Aug. 26.
‘Breakout Phase’
International investors held 61 percent of the government’s bonds due in 2017 as of April, up from 50 percent at the end of 2008, according to the Treasury. They owned 49 percent of bonds due in 2021. Pacific Investment Management Co., which runs the world’s biggest bond fund, is the largest holder of the bonds due in 2017, accounting for 7 percent as of June 30, according to data compiled by Bloomberg. There are currently 39.7 billion reais of the bonds outstanding.
Brazil is in a “developmental breakout phase,” Mohamed El-Erian, Pimco’s chief executive and co-chief investment officer, said in a July 27 radio interview with Bloomberg.
Latin America’s largest economy will grow 7.1 percent this year, the fastest pace in two decades, according to a central bank survey of about 100 analysts released Aug. 23.
U.S. Yields
Global pension funds and Japanese investors increased their purchases of Brazilian debt as yields fell in the U.S. and Japan amid signs the world economy is slowing, according to Willer. Two-year U.S. Treasury notes yielded a record low 0.45 percent on Aug. 24 while 10-year Japanese bonds reached a seven-year low of 0.91 percent the following day.
The extra yield investors demand to hold Brazilian government dollar bonds instead of U.S. Treasuries widened 12 basis points last week to 216, according to JPMorgan Chase & Co.
The cost of protecting Brazilian debt against non-payment for five years with credit-default swaps rose seven basis points to 128, according to data compiled by CMA DataVision. Credit- default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
The real gained 0.4 percent last week to 1.7501 per dollar.
‘Great Opportunity’
Brazil’s benchmark overnight interest-rate equals 6.15 percent after adjusting for inflation, the second highest among 54 nations tracked by Bloomberg. The annual inflation rate has declined to 4.6 percent from 17 percent in 2003 as Lula pared the budget deficit as a percent of gross domestic product and the currency rallied 102 percent against the dollar.
Brazil’s budget deficit equaled 3.4 percent of GDP in the 12 months through July, or about one third the U.S. gap.
Lula’s bonds still offer “a lot” of yield, “given Brazil’s fundamentals,” Ures Folchini, head of fixed income at Banco WestLB do Brasil SA, said in a telephone interview from Sao Paulo. “Foreign investors are looking at the long end of the curve and seeing a great opportunity.”
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Andre Soliani in Brasilia Newsroom at asoliani@bloomberg.net

Brazil Interest Rate Futures Drop to 11-Month Low on Global Growth Concern

2010-08-25T10:02:00.005-04:00

Yields on Brazil’s interest-rate futures contracts declined to an 11-month low on speculation slowing global economic growth may prompt Central Bank President Henrique Meirelles to stop raising interest rates.

The yield on the contract due in January 2012 fell two basis points, or 0.02 percentage point, to 11.13 percent, the lowest level since September, at 9:22 a.m. New York time. At 10.69 percent, the contracts due in January 2011 imply the central bank may keep its benchmark borrowing costs at 10.75 percent for the remaining three policy meetings this year.

A U.S. government report showed orders for durable goods increased in July less than economists forecast, sending yields on the 10-year U.S. Treasury notes to the lowest level in 19 months. In Europe, Ireland’s credit rating was cut one step by Standard & Poor’s yesterday to AA-.

“Meirelles is done with hiking,” said Ram Bala Chandran, a Latin America currency and rates analyst at Citigroup Inc. in New York. “Rates are lower everywhere, driven by global growth concern.”

The real was unchanged at 1.7705 per dollar today.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net

By Ye Xie - Aug 25, 2010 9:52 AM ET

http://www.bloomberg.com/news/2010-08-25/brazil-interest-rate-futures-drop-to-11-month-low-on-global-growth-concern.html

Itau Sees Brazil GDP Growing 7.5% ‘Chinese-Like’ Pace in 2010

2010-05-12T13:16:00.002-04:00

Itau Sees Brazil GDP Growing 7.5% ‘Chinese-Like’ Pace in 2010
May 12 (Bloomberg) -- Brazil’s economy will grow at a faster, “Chinese-like rate” this year as a result of a stronger global economy and measures taken to stimulate domestic demand, Itau Unibanco Holding SA said.

Latin America’s biggest economy should expand 7.5 percent this year, above a previous estimate for 6.5 percent,
Itau’s chief economist, Ilan Goldfajn, wrote in a report. Brazil’s biggest bank by market value also raised its estimate for economic growth next year to 4.8 percent from 4.6 percent.

Even as growth accelerates Itau maintained its call for the central bank to raise the benchmark interest rate to 11.75 percent this year from a current 9.5 percent.

The global economy should grow 4.5 percent, above Itau’s previous forecast of 4.2 percent.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
May 12, 2010, 11:52 AM EDT

Brazil Boosts BNDES Lending Capacity by $20.7 Billion

2010-04-30T17:51:00.000-04:00

April 30 (Bloomberg) -- Brazil’s state development bank will have an additional 36 billion reais ($20.7 billion) to lend under a plan announced by the Treasury today.
Brazil’s Treasury will exchange 1.3 billion reais of shares it owns in Centrais Eletricas Brasileiras SA, a state-controlled power utility, for shares in state-controlled Banco do Brasil SA owned by development bank known as BNDES, said Charles Guedes, a Treasury official. The Treasury will also transfer to the bank a credit of 2.7 billion reais owed to it by Eletrobras, as Latin America’s biggest utility is known.
The two measures will boost capital levels at the development bank, giving it more room to make loans. BNDES can include the Eletrobras shares as part of its capital, while rules didn’t allow shares in Banco do Brasil to be counted as capital.

Today’s measures take advantage of new rules announced April 26 by the Treasury to give the government more flexibility to manage its holdings in state-controlled companies and banks.
Brazil’s government is injecting funds into the Rio de Janeiro-based BNDES to fund large infrastructure spending such as the $11 billion Belo Monte hydroelectric dam in the Amazon and the Growth Acceleration Program, known as PAC. BNDES intends to loan 126 billion reais this year, bank President Luciano Coutinho said in January.
BNDES boosted lending to a record last year to ease the credit crisis on Latin America’s biggest economy.
The bank sets its rates based on Brazil’s 6 percent TJLP, or long-term rate, while the central bank’s 9.50 percent benchmark Selic rate is the benchmark for other loans in the economy.
To contact the reporter on this story: Andre Soliani Costa in Brasilia at asoliani@bloomberg.net
Last Updated: April 30, 2010 17:40 EDT

Brazil Boosts BNDES Lending Capacity by $20.7 Billion (Update1) - Bloomberg.com

Brazil Trades A-Rated as Growth Makes Debt Safer

2010-04-30T11:15:00.000-04:00

April 30 (Bloomberg) -- Brazil’s credit rating, raised to investment grade two years ago, is poised to increase as the economy grows at the fastest pace since 2007, trading in credit- default swaps shows. The cost to protect Brazil bonds, ranked BBB- by Standard & Poor’s, from default for five years fell seven basis points this month to 123 basis points, or 1.23 percentage points, according to data compiled by CMA DataVision. In Europe, where Greece’s spreading debt crisis led to downgrades this week, swaps on Portugal almost doubled this month to 2.78 points, even though its debt is rated A-, three levels higher than Brazil.

“If you look at the European economies, they’re clearly credits in decline and this is a credit on the rise,” Sebastian Briozzo, an S&P analyst, said in a phone interview from Boston. Investors are growing more bullish as President Luiz Inacio Lula da Silva’s stimulus measures pushed quarter-over-quarter growth to 2 percent in the October-to-December period, Brazil’s fastest since a 2.4 percent expansion in the final quarter of 2007, according to government data. Growth will quicken to 6 percent this year, the second-fastest pace in two decades, according to a central bank survey of analysts.

Brazil’s credit-default swaps are less expensive than Bahrain, which is rated A, or four levels higher, as well as South Africa, two steps higher, and Russia, one level. Brazilian swaps point to a ratings increase of as many as two levels, according to Donato Guarino, an analyst with Barclays Plc in New York.

‘Near Future’

At 1.23 points, it costs $123,000 to protect $10 million of Brazilian debt against default for five years. That compares with a cost of $432,000 on March 2, 2009, when the global credit crisis eroded demand for emerging-market assets.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government of company fail to adhere to its debt agreements.

The swap prices show traders expect Brazil to be upgraded “in the near future,” said Jim Craige, who helps manage $12 billion of emerging-market debt at Stone Harbor Investment Partners in New York. “It’s a very good fundamental story.”

The extra yield investors demand to own Brazilian dollar bonds instead of U.S. Treasuries widened three basis points to 1.88 percentage points at 10:26 a.m. in New York, according to JPMorgan. That gap is down from 3.55 points a year ago. The average spread for emerging-market dollar debt shrank one basis point to 2.58 points. A basis point is 0.01 percentage point.

Real’s Rally

The real strengthened 1.4 percent this week after central bank President Henrique Meirelles raised the benchmark interest rate to 9.5 percent from a record-low 8.75 percent on April 28 to stem inflation as the expansion accelerates. The rate increase was Brazil’s first since 2008 and the first in Latin America since the region emerged from the global recession.

The real has gained 9.4 percent in the past three months, the best performance among all currencies tracked by Bloomberg. Brazil’s Treasury may double dollar purchases in the currency market, Treasury Secretary Arno Augustin told reporters in Brasilia yesterday.

The nation’s foreign reserves have climbed 26 percent to a record $247 billion over the past two years as the central bank bought dollars to slow the real’s rally.

The yield on the overnight interest-rate futures contract due in January climbed six basis points to 11.06 percent, the highest intraday level since March 2009.

Narrowing Deficit

Brazil’s credit-default swaps have tumbled by more than half in the past year as the economy’s recovery bolstered tax revenue, helping trim the budget gap to 3.2 percent of gross domestic product from 4.6 percent in October. That compares with projected deficits of 9.4 percent in the U.S., 6.2 percent in South Africa and about 6 percent in Russia.

S&P’s Briozzo said Brazil is a “strong” credit within its rating group. For the country to keep wining rating increases, it has to continue displaying “macroeconomic soundness” and the government needs to pare back stimulus measures implemented amid the crisis, he said.

Rating upgrades are constrained by Lula’s failure to push tax reform legislation through congress and a decline in public investment, said Henry Stipp, an emerging-market fund manager at Threadneedle Asset Management in London, which has $98 billion of assets under management.

‘Clear Deterioration’

“There’s a lack of structural reforms,” Stipp said. “There’s a clear deterioration.”

He said Brazil’s swaps are “fairly priced” with its BBB- rating because Russia’s swaps market is distorted by “technical issues.” Russian five-year credit default swaps trade at 1.42 percentage points.

S&P’s upgrade of Brazil to investment grade in April 2008 was followed by Fitch Ratings a month later and Moody’s Investors Service last September.

When asked for comment on Brazil, Moody’s sent a March 31 report that said the positive outlook on the rating suggests “the chances that the country will stay on a multiyear path of improved creditworthiness are reasonably high.”

Fitch analyst Shelly Shetty wasn’t available to comment.

Brazil swap costs are higher than their fair value because buyers of the country’s corporate bonds have purchased government default swaps to hedge their risk, said Barclays’s Guarino. Marfrig Alimentos SA, the world’s fourth-largest meatpacker, and pulp producer Fibria Celulose SA sold $1.25 billion of bonds yesterday, bringing Brazilian corporate debt issuance in overseas markets this year to $14.7 billion, according to data compiled by Bloomberg.

“If the technical effects get out of the way, Brazil CDS should be tighter,” Guarino said. “Brazil’s credit outlook remains intact. The growth is still strong.”

--With assistance from Camila Fontana in Sao Paulo. Editors: Lester Pimentel, David Papadopoulos
To contact the reporters on this story: Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
April 30, 2010, 10:30 AM EDT

Brazil Trades A-Rated as Growth Makes Debt Safer (Update1) - BusinessWeek

Eletrobras May Swap $2.7 Billion of Debt for Shares

2010-04-29T13:19:00.001-04:00

April 29 (Bloomberg) -- Centrais Eletricas Brasileiras SA, Latin America’s largest utility, is seeking to convert 4.7 billion reais ($2.7 billion) of liabilities to the Brazil’s government into shares, the finance chief said.

Eletrobras, as the state-controlled utility is known, would save 450 million reais a year should the government exercise its right to convert the debt into stock, Chief Financial Officer Armando Casado said April 27 in an interview in Brasilia. The move would cut the interest payments on the debt, he said.

“If Eletrobras manages to do that, it is positive news because by cutting expenses, you boost profit and dividends,” Marcos Severine, an analyst with Sao Paulo-based Itau Unibanco Holding SA, said yesterday in a telephone interview. Severine rates the company an “outperform.”

Rio de Janeiro-based Eletrobras, through subsidiary Cia. Hidro Eletrica do Sao Francisco, or Chesf, led a group that won the rights to build and operate the Belo Monte hydroelectric dam in the Amazon region. The group has said it will seek financing for 80 percent of the 19 billion-real ($11 billion) project from Brazil’s national development bank, known as BNDES.

Brazilian President Luiz Inacio Lula da Silva issued a decree on April 26 allowing the government to swap debt reserves in state-controlled companies for stock without seeking congressional approval. Eletrobras’s debt to the government comes from previous acquisitions of utilities.

Eletrobras rose 29 centavos, or 1 percent, to 30.75 reais at 12:32 p.m. in Sao Paulo trading. The stock has climbed 7.6 percent in the past year, less than the 44 percent gain for Brazil’s benchmark Bovespa index.

--Editors: Jessica Brice, Dale Crofts.
To contact the reporters on this story: Arnaldo Galvao in Brasilia at agalvao1@bloomberg.net; Lucia Kassai in Sao Paulo at lkassai@bloomberg.net
To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net
April 29, 2010, 12:12 PM EDT

Eletrobras May Swap $2.7 Billion of Debt for Shares

Rates Rise As Brazil Sells BRL408M Inflation-Indexed NTN-Bs - WSJ.com

2010-04-27T15:36:00.001-04:00

RIO DE JANEIRO (Dow Jones)--The Brazilian Treasury sold 408 million Brazilian reals ($231 million) worth of inflation-indexed NTN-B bonds at an auction Tuesday, with interest rates rising on emerging-market volatility and expectations for higher local interest rates.
The government sold slightly more than 80% of the BRL500 million worth of bonds on offer Tuesday. The bonds came in three maturities between 2013 and 2020.
The government sold the bonds at average interest rates ranging from 6.50% to 6.75%.
At a similar auction last month, the government sold NTN-B bonds at an interest rate range between 6.37% to 6.44%.
Brazil was forced to pay a higher interest rate to attract skittish investors after credit-ratings agency Standard & Poor's downgraded the sovereign debt of European Union members Greece and Portugal. Interest rates had also ticked higher in recent bond auctions on expectations that the Brazilian Central Bank would raise interest rates later this week.
The bank's Copom rate-setting panel meets Wednesday, when it's expected to increase the benchmark Selic base interest rate by as much as 75 basis points. The Selic currently stands at 8.75%, the lowest level since the reference rate's inception in 1999.
NTN-B bonds pay a rate equal to Brazil's official IPCA inflation rate plus the interest rate established at the auction. The rolling 12-month inflation rate ended mid-April at 5.22%.
The Treasury's next scheduled auction will be held Thursday, when LTN and NTN-F bonds will be sold. The volume of bonds on offer isn't released until the day before the auction.

-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; Jeff.Fick@dowjones.com
Rates Rise As Brazil Sells BRL408M Inflation-Indexed NTN-Bs - WSJ.com

Brazil Federal Debt Stable In March At BRL1.495 Trillion-Govt

2010-04-20T14:54:00.004-04:00

BRASILIA (Dow Jones)--Brazil's total federal debt load remained stable in March at 1.495 trillion Brazilian reals ($857 billion) under the contrasting influence during the period of debt amortization and interest accrual, the government reported Tuesday.

In a joint statement, Brazil's central bank and treasury said the country's domestic federal debt load denominated in reals rose 0.2% from February to BRL1.40 trillion.

The government reported the overall increase in domestic federal debt came alongside BRL12 billion in debt amortization and BRL14.7 billion in interest accrual.

Meanwhile, Brazil's outstanding federal debt overseas fell 2.6% from February to BRL94.7 billion.
Regarding the profile of federal domestic debt in March, treasury officials reported floating-rate debt fell to 35.74% of total domestic debt during the month from 37.66% in February.

At the same time, the share of fixed-rate debt rose to 31.53% from 30.27%.

The share of inflation-indexed bonds rose during the month to 30.82% of debt from 30.15%, while exchange-linked debt fell to 0.72% of the total from 0.74% the previous month.

Brazil's government has been attempting to lengthen its debt profile and reduce its exposure to interest-rate risk through increased sales of fixed-rate and inflation-indexed debt.

The government reported Tuesday that average maturity of domestic debt rose to 3.73 years in March from 3.54 years in February.

At the same time, the government said the volume of domestic debt maturing in the coming 12 months fell in March to 24.01% from 25.45%.

The average cost of debt coming due in the next 12 months rose to 10.72% annually from 10.69%.
The March federal debt figures released Tuesday represent a key element of consolidated public-sector debt figures scheduled for release next week.

Brazil posted net consolidated public sector debt in February of BRL1.34 trillion, equivalent to 42.1% of gross domestic product.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, gerald.jeffris@dowjones.com

Brazil March Tax Revenue BRL59.42B, Up 6.1% Vs 2009

2010-04-20T10:58:00.002-04:00

BRASILIA (Dow Jones)--Reflecting the continuation of a local economic recovery, Brazilian federal tax revenue rose in March to a record level for the month, the federal tax department reported Tuesday.

The government reported revenue rose 6.1% in inflation-adjusted terms from March 2009 to 59.42 billion Brazilian reals ($34.05 billion).

The result was slightly lower than median market estimates of around BRL60 billion, however, and was up 10.4% from BRL53.54 billion reported in February.

The March result brought tax collection for the year to date to BRL185.98 billion.

According to the tax department, an elevation in revenue over recent months has been aided by increased collection from industry, which is up 17.2% so far this year. Additionally, collection from commerce has risen by 11.9% and collection from personal income is up by 7.2%.

In particular, collection of Brazil's Cofins welfare tax is up by 22.8% so far this year, while collection of the PIS welfare tax has risen 15.0%, the department noted.

Brazil collected a total of BRL698.3 billion in tax revenue in 2009, down 2.96% in real terms from 2008.
Brazil's economy, however, is seen growing by more than 5% in 2010 after near zero growth seen last year.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, gerald.jeffris@dowjones.com

http://online.wsj.com/article/BT-CO-20100420-710037.html?mod=WSJ_World_MIDDLEHeadlinesAmericas

Brazil’s Mid-Month Inflation Rises to 11-Month High

2010-04-20T10:30:00.000-04:00

April 20 (Bloomberg) -- Brazil’s mid-month inflation accelerated to a 11-month high in April, reinforcing speculation the central bank next week will raise interest rates for the first time since 2008 to keep prices in check.

Consumer prices as measured by the IPCA-15 index rose 5.22 percent in the 12 months through mid-April, the government’s statistics agency said today in a report posted on its Web site. From the same period a month earlier, the index rose 0.48 percent, in line with the median estimate in a Bloomberg survey of 36 economists. In March, the index rose 0.55 percent.

The yield on the interest rate future contract maturing July 2010, the most traded on Sao Paulo’s BM&F exchange, rose one basis point to 9.43 percent at 8:33 a.m. New York time. The real rose 0.4 percent to 1.7479 per dollar.

Brazil’s central bank will raise the benchmark Selic rate by a half percentage point from a record low 8.75 percent to 9.25 percent in their meeting next week, according to the median forecast of 21 economists in a Bloomberg survey.

Policy makers face the challenge of preventing the economy from “overheating,” as increasing domestic demand fuels expansion of Latin America’s biggest economy, central bank President Henrique Meirelles said in an interview on April 13. The central bank estimates gross domestic product will expand 5.8 percent this year.

Brazil’s central bank targets inflation of 4.5 percent plus or minus two percentage points.

Economists covering Latin America’s biggest economy forecast the central bank will lift the overnight rate to 11.50 percent by year-end, according to the median forecast in a weekly central bank survey of about 100 economists published yesterday. A week earlier, analysts expected the Selic to end 2010 at 11.25 percent.

--With assistance from Dominic Carey in Sao Paulo.-- Editor: Joshua Goodman
To contact the reporters on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net Iuri Dantas in Brasilia at idantas@bloomberg.net
To contact the editors responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

April 20, 2010, 9:37 AM EDT

http://www.businessweek.com/news/2010-04-20/brazil-s-mid-month-inflation-rises-to-11-month-high-update1-.html

Brazil Raises $787.5M From Overseas Bonds Issue

2010-04-16T10:31:00.000-04:00

SAO PAULO (Dow Jones)--The Brazilian government, through National Treasury, said Friday that it raised a total of $787.5 million from an issue of dollar-denominated sovereign global bond due January 2021, more than the $750 million previously announced.

The increase in the final amount was prompted by an extra offer of bonds of $37.5 million to Asian investors, the government said. The bonds were issued at 115.6 basis points over Treasurys to yield 5% a year.

Citigroup Inc. (C) and J.P. Morgan Chase & Co. (JPM) coordinated the transaction, while Banco Santander and Banco do Brasil S/A (BDORY, BBAS3.BR) were co-managers on the deal.

-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-3544-7071; rogerio.jelmayer@dowjones.com

Brazil Raises $787.5M From Overseas Bonds Issue

NEW YORK, April 15 (Reuters) - Brazil on Thursday launched $750 million worth of 10-year dollar-denominated bonds to yield 5 percent, in line with initial guidance, Thomson Reuters IFR reported.

Demand for the bonds, due in 2021, topped $1.85 billion, IFR said.

Citigroup Inc (C.N) and JPMorgan Chase & Co (JPM.N) are the banks managing the issue.
(Reporting by Walter Brandimarte; Editing by James Dalgleish)"
Brazil launches $750 mln in 10-year bonds

BRASILIA, April 15 (Reuters) - Brazil's Treasury said on Thursday it was launching a global bond in U.S. dollars which would mature in January 2021.

China, Brazil sign deals at shortened BRIC summit

2010-04-15T14:39:00.000-04:00

* Hu Jintao shortened Latin America trip after China quake

* BRIC summit moved forward to Thursday

* China to invest in Brazil steel plant, oil sector (Adds Lula quote, Iran, details)

By Raymond Colitt and Emma Graham-Harrison

BRASILIA, April 15 (Reuters) - China and Brazil bolstered their growing ties with trade and investment agreements on Thursday before a summit of the world's top four emerging markets that was cut back after China's leader decided to return home to deal with a major earthquake.

President Hu Jintao canceled visits to Venezuela and Chile because of the quake that killed more than 600 people, and his early return forced the so-called BRIC summit with Brazil, Russia and India to move forward by a day to Thursday evening.

The increasingly influential countries, which account for about 40 percent of the world's population, are expected to use their second leaders' summit to push demands that developing countries be given more say in global financial institutions.

Hu oversaw the signing of deals with Brazilian President Luiz Inacio Lula da Silva aimed at boosting trade and energy cooperation between the two emerging giants, which have grown closer in recent years amid a surge in trade flows.

Lula said a Chinese pledge to build a steel plant at a Brazilian port was also likely and that it would be China's biggest investment ever in Latin America's largest economy.

The leaders gave no details, but Brazilian media reported that China's Wuhan Iron and Steel (600005.SS) will build a plant in a port in Rio de Janeiro state with Brazilian logistics firm LLX Logistica (LLXL3.SA), controlled by billionaire Eike Batista.

Lula also said China had expressed interest in bidding to construct a high-speed train line that is planned to connect Rio de Janeiro and Sao Paulo.

'The possibility for Chinese companies to participate in the modernization of Brazil's infrastructure is exceptional,' Lula said, citing Brazil's preparations for the 2014 soccer World Cup and the 2016 Olympics.

China's Sinopec and the country's development bank signed a strategic development agreement with Brazil's state-run oil giant Petrobras (PETR4.SA)(PBR.N), Sinopec Chairman Su Shulin told Reuters. [ID:nN15230307]

Su said the deal will cover the development of Brazilian oil resources and trade with China.

Brazil's recent discovery of vast offshore oil reserves has opened a new area of potential cooperation with resource-hungry China, which last year agreed to lend $10 billion to Petrobras in return for guaranteed oil supply over the next decade.

Brazil and China also agreed to boost Brazilian beef and tobacco exports to the Asian country, and to move forward with cooperation on satellite launches.

YUAN NOT ON MENU

Hu said after meeting Lula that both countries were willing to increase cooperation on international affairs and to push for reform of the global financial system.

The two leaders also discussed Iran, but Brazil's Foreign Minister Celso Amorim denied reports that Lula asked Hu to delay a United Nations Security Council vote on new sanctions against the country until after Lula visits Tehran next month.

Lula has opposed fresh sanctions over Iran's nuclear program, arguing that negotiations have not been exhausted.

Hu and Lula did not discuss China's currency policy, two Brazilian government sources told Reuters. [ID:nN15239335] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For details of China-Brazil ties, click on [ID:nN13214256]) For details on the BRIC economies, click on [ID:nN14154716] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Brazil and the other BRICs were not expected to risk fraying ties with China by pressuring it to allow the yuan to strengthen, despite concerns about the effect of cheap Chinese exports on their economies.

Hu and Lula were scheduled to meet with Russia's Dmitry Medvedev and Indian Prime Minister Manmohan Singh on Thursday evening under a hastily revised schedule for the summit.

The BRICs are using the summit to strengthen trade and investment ties with delegations of business leaders, bankers, cooperatives, and state development banks exploring business opportunities.

Differences between the four countries have become more evident since their first summit in Russia last year, exposing the limitations of the group's ambitions.

The group is not expected to push for a new international reserve currency to rival the dollar, an idea that was discussed at their last summit. As a major holder of U.S. Treasury bonds, China is not keen to see the value of its investments diminish.

The BRIC leaders may have talks on bypassing the dollar by boosting inter-BRIC currency trade. (Writing by Stuart Grudgings; Editing by Doina Chiacu)

UPDATE 1-China, Brazil sign deals at shortened BRIC summit

Brazil to pump more cash into Eletrobras

2010-04-06T09:21:00.002-04:00

NEW YORK, April 6 (Reuters) - Brazil's government will replenish the capital base of Eletrobras, the country's largest power holding company, this year as part of a plan to boost transparency and lure investment into electricity, O Estado de S. Paulo said on Tuesday, citing Treasury Secretary Arno Augustin.

Under the program, Eletrobras would absorb previously autonomous regional units, Augustin told Estado. The company will start paying about $6 billion in dividends overdue for more than 30 years in June, a move seen by most analysts as an important step toward more transparent management.

The dividend issue 'put hurdles on any discussion over the Eletrobras capitalization, but that step has been cleared and the capitalization will take place this year,' Augustin said in the interview.

'We are just trying to figure out the structure,' he added, without giving any estimates on the size of the capital injection.

President Luiz Inacio Lula da Silva said he wants Eletrobras to become an 'electricity mega-utility' that has more say in the nation's most relevant energy projects, Estado said.

Separately, Augustin also noted that it might not be necessary to pump additional Treasury funds into state development bank BNDES as the pace of loan disbursements by the Rio de Janeiro-based lender was slowing.

The bank is Brazil's main source of long-term corporate lending. Critics of plans to pump more capital into BNDES argue that it has an unfair advantage over private rivals because it borrows funds from the Treasury and the workers severance fund, known as FAT in Brazil, at below-market rates. (Reporting by Guillermo Parra-Bernal, editing by Maureen Bavdek)

Brazil to pump more cash into Eletrobras-report

Tue Apr 6, 2010 9:00am EDT

from the local press:

Governo vai reforçar capital da Eletrobrás

Em entrevista exclusiva, o secretário do Tesouro, Arno Augustin, também afirma que o governo cumprirá meta fiscal do ano

06 de abril de 2010 | 0h 00

Adriana Fernandes - O Estado de S.Paulo

/ BRASÍLIA
O governo vai fazer ainda este ano a capitalização da Eletrobrás. Em entrevista, o secretário do Tesouro Nacional, Arno Augustin, confirma a operação que, segundo ele, será o segundo passo no saneamento da empresa, depois que o governo decidiu pagar aos acionistas dividendos atrasados havia até 30 anos.

O secretário descartou, no entanto, a possibilidade de retirar a estatal elétrica do cálculo das contas do superávit do setor público, como defendem alguns integrantes do governo.

Responsável pela administração do caixa, Augustin prevê que, após o resultado negativo de fevereiro, as contas do governo deverão apresentar déficit em outros meses deste ano. Mas garante que, a partir do segundo semestre, o crescimento mais forte da arrecadação vai garantir o cumprimento - sem artifícios - da meta de superávit primário equivalente a 3,3% do PIB.

Augustin diz ainda que, se preciso, o governo pode elevar o valor dos empréstimos do Tesouro ao BNDES para financiar investimentos. Ele defende o aumento da fatia de recursos do Fundo de Amparo ao Trabalhador (FAT) que é destinada ao BNDES.

Eletrobrás. "Não há necessidade de retirar a estatal do cálculo do resultado das contas públicas. Seria o mesmo que não ter mais estatais federais no cálculo, já que, sem a Eletrobrás, o que sobraria de contribuição dessas empresas seria um valor muito pequeno. Não é o fato de estar ou não no cálculo que impede que ela tenha o modelo da Petrobrás, como quer o presidente. Ter a Eletrobrás na conta é um controle a mais para termos um resultado fiscal positivo. Mas quando as estatais têm resultado menor do que o previsto, o Tesouro compensa fazendo superávit maior, como ocorreu no ano passado."

Governança. "O esforço de transformação da Eletrobrás em uma empresa com modelo mais próximo ao da Petrobrás está em andamento. Já há melhorias importantes de gestão, como a unificação das subsidiárias regionais. É uma empresa com melhoria de governança em processo."

Capitalização. "O governo resolveu um problema de 30 anos referente ao pagamento de dividendos atrasados, que impedia qualquer discussão de capitalização da Eletrobrás. Esse primeiro e mais difícil passo já foi dado. Haverá capitalização este ano. O modelo está sendo discutido."

Superávit. "Do meio para o fim do ano, os superávits nas contas públicas serão bem melhores por causa do aumento da arrecadação. No primeiro bimestre, tivemos investimentos maiores, porque os projetos têm um período de maturação. E, felizmente, eles estão cada vez mais fortes. A tendência é de maior crescimento do investimento no ano. Mas não vamos fechar 2010 com o mesmo crescimento dos investimentos obtido no primeiro bimestre, de 101%."

Arrecadação. "A arrecadação já está crescendo a taxas muito fortes. Acreditamos que vai crescer muito mais a partir do segundo semestre. À medida que os meses vão passando, o ritmo maior da atividade econômica vai tendo impacto na arrecadação. Os dois primeiros meses de receita já foram melhores do que a nossa expectativa."

Déficits e meta cheia. "É possível termos outros resultados negativos ao longo do ano. Mas vamos fazer a meta cheia de superávit primário, de 3,3% do PIB . Não faremos superávit além da meta, como em 2008. Os analistas estão enganados quando dizem que o governo cortou "vento" do Orçamento. Na prática, o valor de 3,3% do PIB de meta de superávit se mostrou capaz de reduzir a relação entre dívida líquida e PIB e, ao mesmo tempo, manter o investimento. Não é um valor teórico, um valor que o Brasil já viu funcionar."
Estatais. "As estatais não vão dar o mesmo resultado negativo do ano passado. Em 2009, coincidiu que muitos investimentos das estatais andaram mais rapidamente, o que levou ao déficit. Além disso, a própria receita das estatais com a expansão da economia em 2010 tende a ser melhor. As receitas de Estados e municípios também vão crescer."

Corte orçamentário. "O corte de R$ 21,8 bilhões feito no Orçamento garante o superávit. Não sei que conta os analistas fizeram para avaliarem que a conta não fecha. Toda crítica é boa, mas nós também fazemos as nossas e temos acertado. O governo, obviamente, sempre tem mais informações que os analistas para fazer as contas. Não temos nada previsto de receitas extraordinárias para este ano."

Subsídios. "A nova linha de R$ 80 bilhões de financiamento do BNDES com subsídio do Tesouro era necessária, mesmo depois da saída da crise. Trata-se de incentivar o investimento. Se não tivermos um forte crescimento de bens de capital, logo ali na frente alguém vai dizer que a utilização da capacidade instalada da indústria está muito forte. Em função disso, alguém pode dizer que o Brasil tem que crescer menos por causa da necessidade de combater a inflação."

BNDES. "A solução estratégica para o BNDES se dará no dia em que o País tiver taxas de juros menores de curto prazo do que de longo prazo. Ficará mais fácil o financiamento pelo próprio BNDES. Ele poderá captar recursos no mercado. Hoje, a taxa de curto prazo, que é a Selic, é maior do que a de longo prazo, a TJLP. Essa distância está diminuindo e vai diminuir mais. Quando isso acontecer, o próprio mercado vai oferecer mais empréstimos no longo prazo. O mercado vai concorrer com o BNDES. Não será necessário o banco ficar tão grande. Ele vai ter concorrência. Vai ser bom."

Empréstimo. "Se for necessário mais dinheiro do Tesouro no BNDES, vamos colocar. Mas acho que não será preciso. Se isso acontecer, será a melhor notícia do ano. Não acredito que o banco conseguirá financiar mais do que os R$ 80 bilhões já emprestados pelo Tesouro."

FAT. "Aumentar o dinheiro do FAT (para o BNDES) pode ser importante. Não precisa ser uma solução só para aumentar o funding BNDES. Poderemos ter várias. Mas uma mudança no FAT tem que ser constitucional. É muito pouco provável que possamos fazer para este ano."

Compra de dólares. "O Tesouro agora tem mais prazo para comprar mais dólares para o pagamento dos compromissos externos. São US$ 11 bilhões."

Para entenderDividendos abrem caminho à capitalização
A decisão do governo de autorizar a Eletrobrás a pagar R$ 10,3 bilhões de dividendos retidos desde o fim da década de 1970 abriu caminho para a capitalização da estatal.

Na época, os dirigentes da empresa desconversaram sobre a possibilidade da operação, agora confirmada pelo secretário do Tesouro, Arno Augustin.
O assunto tem sido tratado em sigilo no governo por causa das possíveis implicações que notícias a respeito do assunto têm nas negociações das ações da Eletrobrás na Bolsa de valores.

A capitalização da Eletrobrás é considerada fundamental para sanear as finanças e dar gás adicional para os investimentos da empresa.
O governo quer que a Eletrobrás siga o mesmo modelo de gestão da Petrobrás.
Por várias vezes, o presidente Luiz Inácio Lula da Silva manifestou o desejo de ver a Eletrobrás transformada numa "superestatal de energia" a exemplo do que a petrolífera representa ao País.

Há quem defenda que a estatal da energia também fique de fora do cálculo do superávit primário, como já ocorre com a Petrobrás. Isso porque essa contabilidade faz com que os investimentos da empresa fiquem limitados.

Governo vai reforçar capital da Eletrobrás - Economia - Estadao.com.br

Brazil Eletrobras proposes equal shareholder dividend

2010-03-31T14:04:00.001-04:00

RIO DE JANEIRO, March 31 (Reuters) - Brazil's state-controlled electricity company Eletrobras on Wednesday proposed giving equal treatment to holders of common and preferred shares for its 2009 dividend payment in a move aimed at boosting transparency.
Eletrobras (ELET6.SA) has for years set aside the equivalent of 6 percent of shareholder equity to pay dividends for holders of its preferred stock.

It will now set aside an equivalent amount for dividends for common shares, which are mostly held by Brazil's government, helping Eletrobras trim tax debts, Eletrobras Finance Director Astrogildo Quental said in an interview.

'We are going to take this to the shareholders assembly, which will approve dividend payments to common shareholders, though this will not affect the preferred shareholders at all,' Quental said.

The government holds around 80 percent of the company's common shares while private investors and the BNDES state development bank own the remainder.

Quental said the company is seeking $1.5 billion in financing for its plan to invest around 9 billion reais ($5.1 billion) this year. It has authorization from the government to borrow up to $2 billion, but has lined up $500 million in financing from the World Bank.

Eletrobras could either issue bonds or borrow the money from the BNDES, Quental said.

The company is hoping to become an investor favorite much like Petrobras (PETR4.SA)(PBR.N), which has become a Wall St. darling in recent years after its partial privatization in 1997.

Eletrobras' move toward equal treatment of shareholder dividends should help boost its perceived transparency.

But investors still worry about concentration of nearly all the voting shares in the hands of the government. In contrast, the government holds only slightly more than 50 percent of shares.

The company on Tuesday said net income tumbled 43 percent in the fourth quarter from the year-ago period as the real (BRBY) strengthened against the dollar.

Eletrobras' preferred shares fell 1.2 percent to 32.30 reais. Common shares (ELET3.SA) slipped 0.33 percent to 26.34 reais. (Reporting by Denise Luna; Writing by Brian Ellsworth and Guillermo Parra-Bernal; Editing by Gunna Dickson)

Wed Mar 31, 2010 1:55pm EDT

Centrais Eletricas Brasileiras S.A.
ELET6.SA
R$ 32.00
-0.60-1.84%
4:25pm EDT

Brazil Eletrobras proposes equal shareholder dividend

Brazil posts record tax revenue for a February

2010-03-18T13:08:00.000-04:00

Brazil posts record tax revenue for a February

* Economic growth boosts tax collections

* 2010 tax income expected to grow 12 percent

BRASILIA, March 18 (Reuters) - Brazil's tax revenue soared to a record for the month of February on the back of a fast-growing economy and will grow 12 percent this year, the government said on Thursday.

Tax income, adjusted for inflation, jumped to 53.5 billion reais ($29.8 billion) in February, an increase of 13.23 percent over February last year, data from Brazil's national tax authority showed.

In January, tax revenues had totaled 73.6 billion reais.

'The result is fundamentally due to a recovery of the main economic indicators, which influence tax revenue,' the tax authority said.

The economy is expected to grow by 5.5 percent this year, compared with a contraction of 0.2 percent last year.

As a result, the government expects total revenue to increase 12 percent in 2010 over last year.

'I believe this will be a good year and we'll be able to return to 2008 (revenue) levels,' Otacilio Cartaxo, head of the federal tax authority, told a news conference in Brasilia.

For the first two months, tax income reached 127 billion reais, an increase of 13.46 percent over the same period last year.

Brazil's fiscal finances deteriorated in 2009 as the tail end of a recession forced the government to cut levies for key industries, squeezing government revenues. ($1=1.793 reais) (Reporting by Isabel Versiani; Writing by Raymond Colitt; Editing by James Dalgleish)

Thu Mar 18, 2010 12:21pm EDT

Banco Bradesco Launches $750M 5Yr Bond;175 BPs Over Treasurys

2010-03-16T14:59:00.000-04:00

Banco Bradesco Launches $750M 5Yr Bond;175 BPs Over Treasurys

NEW YORK (Dow Jones)--Banco Bradesco (BBD), Brazil's second-largest private bank, launched a $750 million, five-year-bond deal Tuesday, offering a premium of 175 basis points over comparable U.S. Treasury notes, according to a person familiar with the deal.

The bonds are rated Baa2 by Moody's and BBB by Standard & Poor's.

The deal is expected to price later Tuesday via bookrunners Goldman Sachs, Bradesco BBI and Banco Votorantim.

In its last foray in to the dollar bond market in September, Bradesco sold $750 million in 10-year bonds offering a yield of 6.75%.

-Kejal Vyas, Dow Jones Newswires; 212 416 2185; kejal.vyas@dowjones.com

MARCH 16, 2010, 1:20 P.M. ET

Petrobras Will Raise Up to $60 Billion in Share Issue

2010-03-15T21:12:00.002-04:00

Petrobras Will Raise Up to $60 Billion in Share Issue

March 15 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-run oil company, will issue as much as $60 billion of new stock, most of which will go to the government in exchange for oil rights, Energy Minister Edison Lobao said.

“Petrobras has no funding problems,” Lobao told reporters today in Sao Paulo. He said the company will issue between $40 billion and $60 billion of new stock. “The share sale will help us to diversify our funding sources.”
President Luiz Inacio Lula da Silva sought to boost state control over Petrobras and deepwater oil deposits after the company discovered the Americas’ largest oil find in more than three decades. Under legislation proposed by Lula, Brazil’s government is seeking to swap 5 billion barrels of oil in the pre-salt region for Petrobras shares.

Rio de Janeiro-based Petrobras is spending $174.4 billion in the five years through 2013 as it prepares to tap the offshore fields. The company’s Tupi field, the biggest discovery since Mexico’s Cantarell since 1976, may hold as much as 8 billion barrels of oil, Petrobras has said.

Lobao said the Senate will likely approve the oil-rights transfer within two months, allowing Petrobras to sell shares by the end of June. Marcello Paixao, a portfolio manager at Principia Capital Management in Sao Paulo, said the share sale is more likely in the second half of the year.

Lobao is “probably being very optimistic,” Paixao, who helps manage 90 million reais ($51 million), including Petrobras stock, said today in a telephone interview. “Market people are expecting these changes to be approved, but doubt it will happen in the first half.”

Larger Estimate

Lobao’s estimate tops previous forecasts. Luciano Coutinho, president of Brazil’s state development bank, known as BNDES, said March 3 that Petrobras may raise $35 to $40 billion.

Credit Suisse, in a Feb. 10 note to clients, forecast the share sale to reach as much as $50 billion. About $30 billion of the stock would go to the government in exchange for the oil with the rest offered to minority shareholders, according to Credit Suisse.

Bank of America Corp., the largest U.S. lender, raised $19.3 billion in December in the biggest sale of stock or preferred shares by a publicly listed U.S. company since at least 2000, according to data compiled by Bloomberg.

Petrobras fell 29 centavos, or 0.8 percent, to 36.77 at 3:15 p.m. New York time. The stock has gained 33 percent in the past year, compared with a 77 percent gain for Brazil’s benchmark Bovespa index.

To contact the reporters on this story: Lucia Kassai at lkassai@bloomberg.net; Peter Millard in Rio de Janeiro at at Pmillard1@bloomberg.net
Last Updated: March 15, 2010 15:33 EDT"

Banco Bradesco to Sell Benchmark Dollar Bond Overseas

2010-03-15T17:07:00.001-04:00

Banco Bradesco to Sell Benchmark Dollar Bond Overseas

March 15 (Bloomberg) -- Banco Bradesco SA, Brazil’s second- largest lender by market value, plans to sell benchmark dollar bonds in its second overseas debt issue since September, said a person familiar with the transaction.

Goldman Sachs Group Inc., Banco Bradesco and Banco Votorantim will arrange the five-year bond offering, said the person, who declined to be identified because terms aren’t set. A benchmark sale typically means at least $500 million in size. The Osasco, Brazil-based bank sold $750 million of 10-year notes in September.

Banco Bradesco is returning to international bond markets after the company’s borrowing costs tumbled. The yield on Bradesco’s 6.75 percent bonds due in 2019 sank 44 basis points since September to 5.94 percent, the lowest since the securities were issued, according to data compiled by Bloomberg.

“It’s a really strong bank with a following both in Brazil and abroad,” said Bevan Rosenbloom, an emerging-market debt strategist with RBS Securities Inc. in Stamford, Connecticut. “The macro situation is very strong in Brazil. Consumption is increasing, credit is increasing, unemployment is down.”

Brazilian banks including Banco Daycoval SA, Banco do Brasil SA, Banco Pine SA and Banco Cruzeiro do Sul SA have also sold dollar bonds overseas this year as the economic recovery in Latin America’s biggest economy fuels demand for the securities. Brazilian borrowers topped dollar bond sales in Latin America last year, issuing $25 billion overseas, as the economy was among the first to emerge from the recession.

A Banco Bradesco spokeswoman declined to comment.

--Editor: Lester Pimentel
To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net.net
March 15, 2010, 4:55 PM EDT

Brazil's Eletrobras to invest $5.1 bln in 2010 | Reuters

2010-03-15T16:26:00.001-04:00

UPDATE 1-Brazil's Eletrobras to invest $5.1 bln in 2010

SAO PAULO, March 15 (Reuters) - Brazilian state-owned power utility Eletrobras (ELET6.SA) will boost investment by about two-thirds this year mainly for the some of the largest hydropower dam and electricity transmission projects in the nation, the company's chief executive said on Monday.

Eletrobras, Latin America's largest power holding utility, plans to increase investment to 9 billion reais ($5.1 billion) this year from 5.4 billion reais in 2009, CEO Jose Antonio Muniz said. Investments would total around 15 billion reais for 2011-2012, excluding new projects in which the company could take part, he added.

'To the 15 billion we will have to add something for new projects that could be contemplated,' Muniz said at a press conference at an energy-related event in Sao Paulo.

The investments to be made this year would go mainly to the Santo Antonio and Jirau hydroelectric power stations and to transmission lines that link Porto Velho in the north of Brazil to Sao Paulo in the southeast.

A planned capital injection of around 14 billion reais by Brazil's government, to enable the company to pay dividends owed to shareholders since the 1970s, would not happen until at least 2011 by when a new government will have been installed.

Eletrobras will sign an agreement with neighbor Uruguay for the construction of a transmission line running to the country from Brazil's southernmost state Rio Grande do Sul.

The company is also planning to participate in hydroelectric projects in Nicaragua, Argentina, Peru, Costa Rica and Guyana and would provide details on these investments in plans it will publish in June.

Eletrobras shares rose 2.5 percent to 31.64 reais in Sao Paulo.

($1=1.765 reais) (Reporting by Roberto Samora; Writing by Peter Murphy; Editing by Steve Orlofsky)

Mon Mar 15, 2010 3:08pm EDT

Centrais Eletricas Brasileiras S.A.

ELET6.SA

R$ 31.40

+0.53+1.72%

4:11pm EST

Mantega Says Brazil Currency Situation Not ‘Ideal’

2010-03-05T13:48:00.002-05:00

Mantega Says Brazil Currency Situation Not ‘Ideal’

March 5 (Bloomberg) -- Brazilian Finance Minister Guido Mantega said today the country’s currency situation isn’t “ideal,” signaling the government may step up interventions in the market as it seeks to temper the real’s gains.

“We have a relatively stable situation now,” Mantega said today in a speech from Sao Paulo. “It’s not an ideal situation. We haven’t resolved the competitiveness issue.”

Brazil’s real has gained 51 percent in the past five years, making its exports more expensive in dollar terms and putting local companies at a disadvantage when competing against manufacturers in China. The real headed today to its fourth weekly gain in five weeks, as investors flocked to the country’s stocks and bonds amid ebbing concern about the recovery of the U.S. economy and Greece’s budget deficit.

The real has climbed 1.6 percent so far this week to 1.7786 per dollar at 12:19 p.m. New York time, from 1.8076 on Feb. 26. Today was the currency’s eight consecutive day of gains, the longest winning streak since July.

“As the real drops below 1.80 the government increases the noise, the threats,” Tony Volpon, a Latin America strategist at Nomura Holdings Inc., said in a telephone interview. “We should see a higher level of intervention, but I’m not sure to what extent it will be effective.”

The central bank said it bought dollars in the spot market at an auction today for 1.7793 reais each.

To contact the reporter on this story: Andre Soliani Costa in Brasilia at asoliani@bloomberg.net; Leonardo Lara in Sao Paulo at llara1@bloomberg.net
Last Updated: March 5, 2010 12:37 EST"

Latin Bond Sales to Rebound, Credit Suisse, BofA Say

2010-03-03T23:54:00.000-05:00

Latin Bond Sales to Rebound, Credit Suisse, BofA Say

March 4 (Bloomberg) -- Latin American governments and companies will step up international bond sales in coming weeks after issuance slumped to a six-month low in February amid concern Greece will default, Credit Suisse Group AG and Bank of America Corp. said.

Sales totaled $1.8 billion last month, the lowest tally since August and down from $7.9 billion in January, according to data compiled by Bloomberg. Chile, which is seeking financing after its worst earthquake in five decades, may be among issuers to sell debt as markets open back up, said Michael Schoen, head of Latin American debt capital markets at Credit Suisse.

Issuance has begun to pick up in the U.S. corporate bond market, with high-yield sales rising more than two-fold this week, amid speculation the European Union will help Greece close its budget deficit. Latin American offerings may follow after developing nations’ benchmark borrowing costs, as measured by JPMorgan Chase & Co., fell 42 basis points from a two-month high of 3.27 percentage points on Feb. 5.

“The market was a lot tougher a couple of weeks ago than it is right now,” Schoen, who has worked in debt capital markets for 17 years, said in telephone interview from New York. “There seems to be more and more comfort that we’re getting to a reasonable place on whether there will be support for Greece.”

February issuance also slowed because companies had to complete 2009 results before tapping capital markets, he said.

“As soon as the companies update the documents with full- year numbers, you’ll see borrowing,” Schoen said.

U.S. High Yield

Latin American companies and governments raised $59.1 billion last year, the most since 2005, as the global economic recovery fueled demand for higher-yielding assets, according to Bloomberg data. Brazilian borrowers topped bond sales in the region in 2009, issuing $25 billion, as Latin America’s biggest economy was among the first to emerge from the recession.

The extra yield investors demand to own emerging-market sovereign dollar debt instead of U.S. Treasuries has dropped to 2.85 percentage points from 3.27 points on Feb. 5, according to JPMorgan’s EMBI+ index. The spread on emerging-market corporate bonds shrunk 26 basis points over that time to 3.46 percentage points, according to JPMorgan.

U.S. high-yield companies led by privately held hospital chain HCA Inc. have sold $1.98 billion of bonds this week, compared with $770 million in the same period last week, according to data compiled by Bloomberg.

Pemex, Mexico, Chile

While Latin American overseas borrowing will pick up this month, issuance this year will fall short of the record reached last year, said Augusto Urmeneta, head of Latin American debt capital markets at Bank of America.

“The market is going to revive, but it’s unlikely it will reach last year’s levels because Latin American companies are, in general, well capitalized,” Urmeneta, who has worked in debt capital markets for 12 years, said in a telephone interview from New York. “There’s going to be a decent supply of bonds coming from Mexico, not huge, and to a lesser extent from Brazil.”

Bank of America was the sixth-biggest underwriter of Latin American bonds last year, while Credit Suisse was the ninth- largest, according to data compiled by Bloomberg. Credit Suisse, Barclays Plc and Citigroup Inc. arranged a $1 billion bond sale for Petroleos Mexicanos in January. Bank of America and Citigroup managed a $1 billion issue by Mexico that month.

Chile may tap overseas debt markets as it seeks to fund reconstruction after the earthquake, Schoen said. The country hasn’t sold an international bond since 2004. Finance Minister Andres Velasco declined to comment in a Feb. 28 phone interview on how the government plans to finance the rebuilding effort.

“In Chile, maybe you see the sovereign coming on the back of the tragedy,” Schoen said. “It wouldn’t surprise me.”

To contact the reporter on this story: Veronica Espinosa in New York at vespinosa@bloomberg.net
Last Updated: March 3, 2010 23:22 EST

Petrobras May Issue $40 Billion of Shares, BNDES Says

2010-03-03T17:05:00.001-05:00

Petrobras May Issue $40 Billion of Shares, BNDES Says

March 3 (Bloomberg) -- Petroleo Brasileiro SA’s biggest minority shareholder said the state-controlled company may issue up to $40 billion in shares, less than some analysts forecast, as part of a plan to swap stock for oil off Brazil’s coast.

The capitalization “could be $35 billion to $40 billion,” said Luciano Coutinho, president of the BNDES, Brazil’s state development bank and a Petrobras shareholder. “It will be the largest public offering ever in global markets,” Coutinho said today in a Bloomberg television interview.

Credit Suisse, in a Feb. 10 note to clients, forecast the share sale to reach as much as $50 billion, with about $30 billion of stock going to the government in exchange for 5 billion barrels of offshore oil and the rest offered to minority shareholders. JPMorgan Chase & Co. analysts in a note yesterday forecast the capital increase at $40 billion.

Brazilian President Luiz Inacio Lula da Silva sought to boost state control over offshore reserves and Petrobras after the company’s discovery of the Tupi field, the biggest crude find in the Americas since 1976. The lower house approved the bill to transfer the oil in exchange for shares yesterday and will send the measure to the Senate, which will have 45 days to pass it, Energy Minister Edison Lobao said today in an interview.

“Within Estimates”

The BNDES’s forecast is “within the market’s estimates,” said Rogerio Poppe, who helps manage 9 billion reais ($4.77 billion) in assets at BNY Mellon in Rio de Janeiro. “The important thing is that we’re getting closer to this.”

The final value of the share sale will depend on the price of oil the government will sell to Petrobras. The government will hire independent auditors to calculate the value.

“I think any number right now is a pure guess; nobody knows for sure how much the barrels of oil are worth,” said Christian Audi, an analyst with Banco Santander SA in New York.

Rio de Janeiro-based Petrobras is investing $174.4 billion over five years to boost output and tap deposits off Brazil’s coast in the so-called pre-salt region. Tupi, discovered in 2007, may hold as much as 8 billion barrels, Petrobras has said.

A Petrobras press official, who asked not to be identified because of company policy, declined to comment on the value of the share sale.

Petrobras rose 3 centavos, or 0.1 percent, to 35.15 reais in Sao Paulo trading. The stock earlier touched 35.82 reais, the highest since Jan. 20.

‘Viable’ Offering

The share offering “is perfectly viable,” Coutinho said in the interview at Bloomberg’s office in London. “Although it’s a very sizeable one, we think there is liquidity and there is appetite in the market for the operation.”

Bank of America Corp., the largest U.S. lender, raised $19.3 billion in December in the biggest sale of stock or preferred shares by a publicly-listed U.S. company since at least 2000, according to data compiled by Bloomberg. The Charlotte, North Carolina-based bank used the offer to repay rescue funds and free itself from restrictions after accepting assistance from the Troubled Asset Relief Program. In May, Bank of America had raised $13.5 billion in response to government stress tests.

BNDES may increase its stake in Petrobras through the stock sale, Coutinho said. Minority investors will have the option to buy shares proportionate to their current stake.

Petrobras Chief Financial Officer Almir Barbassa said Feb. 1 that the company expects to raise between $15 billion to $30 billion from minority shareholders.

Market Reaction

“It depends on how strongly the market will react,” Coutinho said. “We will be prepared to increase our participation if it’s the case, but at least we’ll keep the participation we have now.”

BNDES holds 7.7 percent of outstanding shares, the Petrobras press official said.

Petros-Fundacao Petrobras de Seguridade, the pension fund of Petrobras employees, also plans to buy shares in the offering, Petros President Wagner Pinheiro told reporters in Rio de Janeiro today.

--With assistance by Maria Luiza Rabello in Brasilia and Alex Ragir, Peter Millard and Helder Marinho in Rio de Janeiro. Editors: Jessica Brice, Carlos Caminada.

To contact the reporters on this story: Laura Price in London at lprice3@bloomberg.net; Juan Pablo Spinetto in London at jspinetto@bloomberg.net

Brazil Merchant Bank BTG Buys Stake In Local Mitsubishi - WSJ.com

2010-03-01T15:13:00.000-05:00

Brazil Merchant Bank BTG Buys Stake In Local Mitsubishi
SAO PAULO (Dow Jones)--Brazilian merchant bank BTG Pactual said Monday that it has acquired a minority stake in Mitsubishi Motors do Brasil in a bet that the country's auto market will grow for decades to come.

'There is no exit strategy with this purchase,' said Carlos Fonseca, president of the private-equity division at BTG. 'We are not in this for the short or medium term. This is a long-term marriage that is confident the Brazilian economy will expand and that the auto market will grow along with it,' he said.

Eduardo Sousa Ramos, president of Mitsubishi Motors in Brazil, said that the two have been courting each other since early 2009. BTG will gain one seat on the five-member board. No figures were given for the deal, announced late Monday.

'We did not seek out BTG because we are looking to increase capital or looking for funding for new projects,' Ramos said. 'BTG will have a small stake in the company and it will allow us to have access to long-term financial resources that will help us better plan for the Mitsubishi's future in Brazil,' he said.

Mitsubishi opened its first Brazilian assembly line in September 1998. It makes the costly twin cabin L200 pick-up in Brazil.

Mitsubishi, a unit of Japan's Mitsubishi Motors Corp. (MMTOY, 7211.TO), is a small auto company in Brazil. It was ranked the No. 7 seller of pick-up trucks and sport-utility vehicles in January with a 5.8% market share, according to sales reported last month by the National Automotive Dealerships Association, or Fenabrave.

Fiat SpA (FIATY, F.MI), General Motors Co. and Volkswagen (VLKAY, VOW.XE) were the top three with a combined market share of 50.4%.

Brazil sold 3.1 million vehicles in 2009, up from 2.8 million in 2008. Expectations are for the industry to sell at least 3.3 million in 2010.

-By Kenneth Rapoza, Dow Jones Newswires; 5511-2847-4541; kenneth.rapoza@dowjones.com

Brazil's Camargo Correa To Issue $1.66B In Commercial Papers

2010-03-01T09:15:00.000-05:00

Brazil's Camargo Correa To Issue $1.66B In Commercial Papers

SAO PAULO (Dow Jones)-Brazil's construction company Camargo Correa SA is planning to raise about 3 billion Brazilian reals ($1.66 billion) from the issue of commercial papers, Fitch rating agency said in a press release late Friday.

The company will use the proceeds of the issue to finance the acquisition of a minority stake in Portuguese cement maker Cimentos de Portugal, or Cimpor (CPR.LB).

Earlier this year, the company reached agreements to acquire a 31.12% stake in Cimpor, for a total amount of approximately BRL3.5 billion.

'Strategically, Fitch views the acquisition positively. It will allow Camargo to increase its presence in the global cement market, and it should result in synergies with Camargo's highly correlated core businesses (cement, engineering and construction). Cimpor's presence in 13 countries, including Brazil where it operates six cement plants and 32 ready mix units, would further improve Camargo's geographic diversification,' Fitch said.

The commercial papers, which would mature in six months, was rated at F1(bra) by Fitch.

Camargo Correa is one of the largest private industrial conglomerates in Brazil. As a holding company, Camargo has full ownership interests in cement, engineering and construction companies and controlling positions in homebuilding, textiles, footwear and sportswear manufacturing companies. It also has equity interests in energy, transportation (highway concessions) and steel businesses.

-By Rogerio Jelmayer, Dow Jones Newswires; 5511-2847-4521; rogerio.jelmayer@dowjones.com

Brazil Raises Reserve Requirements as Crisis Eases

2010-02-24T19:13:00.001-05:00

Brazil Raises Reserve Requirements as Crisis Eases

Feb. 24 (Bloomberg) -- Brazil’s central bank raised reserve requirements for banks, demanding they deposit an additional 71 billion reais ($39 billion), as policy makers end rules designed to increase liquidity during the global credit crunch.

“There is no more need for these measures,” central bank President Henrique Meirelles told reporters in Brasilia today. “The liquidity conditions are already adequate.”

To bolster economic growth, policy makers beginning in September 2008 injected about 100 billion reais into the economy by lowering the amount of money that banks must keep on reserve with the central bank. The bank also cut the so-called Selic benchmark lending rate to a record 8.75 percent in July 2009.

“The Brazilian monetary authority reckons that funding conditions in Brazil are no longer as problematic as they were in the aftermath of international jitters,” Jankiel Santos, chief economist at Banco Espirito Santo de Investimento in Sao Paulo, said today in a note. “The reserve requirement changes should not be taken as a shift in the monetary policy stance.”

Looser reserve requirements free up capital for banks to make loans and boost economic growth, while stricter reserve rules reduce liquidity and can help keep a lid on inflation. Brazil, Latin America’s largest economy, is emerging from its first recession since 2003, and economists have increased their inflation forecasts because of increased consumer demand.

Effect on Inflation

The measures announced today are “neutral” with regard to interest rates charged by banks, and policy makers continue to view the benchmark interest rate as its main tool for controlling consumer price increases, said Aldo Luiz Mendes, the central bank’s director of monetary policy.

Faster inflation may prompt the central bank to increase interest rates in April, according to the median forecast of analysts surveyed by the central bank for a study published Feb. 22.

Some of the new reserve requirements will take effect on March 22, while rules for timed deposits go into effect April 9.

As part of the changes, banks that had deposited government bonds with the central bank to satisfy their reserve requirements will have to substitute an equal amount of cash.

In September the central bank took its first step toward tightening reserve requirement rules. Banks, which had been allowed to satisfy reserve requirements by buying loans from lenders with up to 7 billion reais in assets, saw this limit reduced to 2.5 billion reais.

The limit will remain at 2.5 billion reais through June 30, the bank said today. Currently, the measure keeps 29 billion reais available for lending, it said.

February 24, 2010, 06:33 PM EST

By Andre Soliani and Maria Luiza Rabello

Arrecadação federal cresce 14% e bate recorde em janeiro

2010-02-23T18:45:00.001-05:00

Arrecadação federal cresce 14% e bate recorde em janeiro

A arrecadação de impostos e tributos de janeiro deste ano atingiu a marca dos R$ 73 bilhões e é recorde para o mês. O crescimento real é de 13,64% em comparação a janeiro de 2009. No início do ano passado, a arrecadação federal somou pouco mais de R$ 64 bilhões - corrigida pelo Índice de Preços ao Consumidor Amplo (IPCA) - e foi prejudicada pelas medidas de desoneração adotadas pelo governo para amenizar os efeitos da crise financeira mundial.

De acordo com Raimundo Eloi de Carvalho, coordenador-geral de Estudos, Previsão e Análise da Receita Federal, o crescimento expressivo começou em outubro do ano passado, quando os efeitos da crise mundial foram amenizados.

'Esse recorde decorreu da recuperação dos indicadores macroeconômicos, principalmente do aumento da produção industrial, da quantidade de vendas e da lucratividade de empresas', disse.

A média mensal da perda com desonerações fiscais no ano passado, segundo Carvalho, ficou em cerca de R$ 2,5 bilhões. Raimundo Eloi de Carvalho afirma que em 2010, a situação será diferente.

'Em termos líquidos, não teremos perda de arrecadação por conta de desonerações. Tivemos algumas desonerações temporárias, mas já houve recomposição das alíquotas esse ano e, portanto, crescimento na arrecadação', afirmou Carvalho.

O setor automotivo foi um dos principais responsáveis pelo resultado positivo de janeiro de 2010. 'Nesse setor, ocorreu a conjunção de três indicadores positivos: aumentos nas vendas, recomposição alíquotas e recuperação da produção industrial', disse. Ainda segundo Raimundo Eloi de Carvalho, é possível dizer que a crise financeira não atinge mais a arrecadação federal.

'Desde outubro, quando tivemos reversão das quedas de arrecadação, é possível dizer que a crise não atinge mais o setor. A partir dessa visão de hoje posso dizer que esperamos que arrecadação de 2010 em relação a 2009 seja positiva', afirmou."

Fonte: Reuters News

Atualizada às 16h37
Luciana Cobucci
Direto de Brasília

Brazil Forms Sovereign Wealth Fund Advisory Board - WSJ.com

2010-02-22T13:48:00.000-05:00

Brazil Forms Sovereign Wealth Fund Advisory Board
BRASILIA (Dow Jones)--Moving forward with the administration of its recently created sovereign wealth fund, Brazil's government on Monday established a special advisory board to supervise the fund's investment decisions, according to a presidential decree published in the country's federal register.

Under the decree, the board will be headed by the country's Finance Minister, Guido Mantega, and will also include Planning Minister Paulo Bernardo and the president of the country's central bank, Henrique Meirelles.

Votes from only two of the board's three members will be necessary, however, to ratify decisions on the fund's investments.

The board will meet regularly on a quarterly basis, though extraordinary board meetings can be called by its president.

Among its responsibilities, the board will approve investment return targets, ratify the fund's budgeting decisions, and create a technical consulting committee.

Brazil created the sovereign wealth fund in late 2007 with the aim of reinforcing public sector savings and funding projects of strategic interest abroad.

The sovereign wealth fund currently manages 16.3 billion Brazilian reals ($9 billion), up from 14.3 billion when it was established in late 2008.

According to the fund's rules, fund investments overseas must obtain a minimum return equivalent to the six-month London Interbank Offered Rate. Investments in Brazil must obtain a minimum return equivalent to the country's TJLP long-term interest rate, currently at 6% annually.

The fund also will be free to buy dollars in the local currency market as part of its investment strategy.

Upon formalization of the fund's management rules in December, the government named central bank career employee Luiz Claudio Portela as the chief administrator for its day-to-day operations.

-By Gerald Jeffris, Dow Jones Newswires; 5561-3335-0832; gerald.jeffris@dowjones.com

Rates Lower As Brazil Sells BRL4.03B LTNs At 9.78%-11.93% - WSJ.com

2010-02-18T13:02:00.000-05:00

Rates Lower As Brazil Sells BRL4.03B LTNs At 9.78%-11.93% - WSJ.com: "RIO DE JANEIRO (Dow Jones)--Rates were mostly lower Thursday in the Brazil National Treasury's sale of fixed-rate LTN and NTN-F bonds due to greater demand.

The government sold 4.027 billion Brazilian reals in fixed-rate LTN bonds out of BRL4.5 billion ($2.46 billion) offered.

The bonds were sold in two different maturities, October 2010 and July 2012, at average interest rates ranging from 9.78% to 11.93%.

Thursday's interest rate range for the LTNs maturing in October was lower than the range of 9.78% to 12.29% paid at a similar auction on Jan. 21, while the 2012 maturity was at the same level paid at a similar auction on Feb. 11.

Traders said demand rose for the October 2010 maturity as there are growing expectations the central bank will start raising its Selic base rate later this year.

Some investors believe the hike could come as early as April.

The Selic rate currently stands at 8.75%. Brazil's interest rates are set to rise in order to counter inflationary pressure as the country's economic recovery gains further momentum. Investors expect Brazil's economy will grow around 5% in 2010.

LTNs are fixed rate, zero-coupon bonds.

The government also sold BRL1.5 billion in NTN-F bonds.

NTN-Fs are coupon-bearing, fixed-rate bonds.

The NTN-F bonds were sold at two maturities: in 2014 and 2021 and showed rates edging upwards.

The government Thursday sold the NTN-F bonds at interest rates ranging from 12.42% to 13.39%, rates at a similar auction of NTN-F bonds on Feb. 11 ranged from 12.33% to 13.23%.

Treasury sold all BRL750 million in LFT bonds dated 2013 and 2015. The Treasury sold 447.7 million LFTs with the 2013 maturity at par and the other 302.3 million for 2015 also at par with the current Selic rate.

LFT bond rates rise and fall with the Selic.

-By John Kolodziejski, Dow Jones Newswires; 5521-2586-6086; john.kolodziejski@dowjones.com"

Brazil's Cetip in talks with Germany's Clearstream | Reuters

2010-02-12T18:53:00.000-05:00

Brazil's Cetip in talks with Germany's Clearstream

SAO PAULO, Feb 12 (Reuters) - Brazil clearinghouse Cetip (CTIP3.SA) said on Friday it is in strategic cooperation talks with Deutsche Borse AG's (DB1Gn.DE) Clearstream.

CETIP is the largest custodian of corporate fixed income securities in Latin America.

The possible deal will include joint development and distribution of collateral management services Cetip offers to its participants, Cetip said in a statement to securities regulator CVM.

Clearstream is a leading securities depository.

Cetip shares closed 0.6 percent higher on Friday, while Brazil's benchmark Bovespa stock index .BVSP fell 0.4 percent. (Reporting by Daniela Machado; writing by Raymond Colitt; editing by Andre Grenon)"

Goldman Sachs Says Buy Brazil’s Real Following Tumble

2010-02-01T17:11:00.001-05:00

Goldman Sachs Says Buy Brazil’s Real Following Tumble
Feb. 1 (Bloomberg) -- Goldman Sachs Group Inc. recommended investors buy Brazil’s real, saying the country’s “strong” economic growth will spark a rebound after it posted the worst rout among major currencies last month.

“Brazil’s growth has remained strong and is accelerating,” currency analysts including London-based Thomas Stolper wrote in a research note to clients. “Together with cyclical assets moving back to a more constructive view of the world, a more hawkish central bank stance could support a return of the Brazilian real towards the lower end of the recent trading ranges.”

Goldman Sachs, which called the real the world’s most “overvalued” currency as recently as Dec. 15, recommended clients buy it at 1.8870 per dollar, predicting the real will advance to 1.75. Investors should exit the trade if the real were to slide to 1.94, the Goldman Sachs analysts said.

The real plunged 7.9 percent in January following a 33 percent advance in 2009 amid concern China, the biggest buyer of Brazilian exports, will curb bank lending to slow economic growth and keep inflation in check. That slide was more than all 171 currencies tracked by Bloomberg except for the Venezuelan bolivar and Madagascar ariary.

The real jumped 2.5 percent today, the most since Oct. 29, to 1.8482 per dollar after ending last month at 1.8950.

Brazilian policy makers signaled after their Jan. 27 policy meeting that they may be preparing to raise interest rates soon when they removed language from their statement that said the current rate was adequate to contain inflation. The central bank has held the rate at a record low of 8.75 percent since July.

Economists expect policy makers to raise the rate to 11.25 percent by year-end, according to the median forecast in a central bank survey of about 100 financial institutions published today.

To contact the reporter on this story: Ye Xie in New York at +1-212-617-2768 or yxie6@bloomberg.net"
February 01, 2010, 04:43 PM EST

Brazil's Braskem Set To Become Global Petrochemicals Player - WSJ.com

2010-01-22T10:50:00.001-05:00

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

Brazil's Mantega Paints Positive Picture At Cabinet Meeting - WSJ.com

2010-01-21T12:05:00.000-05:00

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"

Itau Raises Target On Brazil's Eletrobras ADRs To $31.00 - WSJ.com

2010-01-21T11:10:00.000-05:00

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"

Banco do Brasil Sells $1 Billion of Bonds Overseas (Update2) - Bloomberg.com

2010-01-15T15:51:00.000-05:00

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"

Banco do Brasil in Talks to Arrange 9 Billion Reais Dam Loan - Bloomberg.com

2010-01-12T21:47:00.000-05:00

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

Brazil to choose France's Rafale jet-govt source | Reuters

2010-01-11T15:25:00.001-05:00

* 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 Carry-Trade Flows to Climb, StanChart Says

2010-01-07T11:11:00.000-05:00

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.

The Brazilian currency lost 0.6 percent to 1.7415 per dollar, at 10:33 a.m. New York time, from 1.7310 yesterday.

The real surged 33 percent last year, more than all other major currencies tracked by Bloomberg, as Latin America’s biggest economy was one of the first to recover from the global recession. In January 2009, when the real traded as weak as 2.3996, Standard Chartered forecast it would end the year at 1.9 per dollar. The median year-end forecast at the time in the Bloomberg survey was 2.24 per dollar.

Rising Rates

Standard Chartered’s 11.5 percent benchmark interest-rate forecast for the end of this year is the highest in a Bloomberg survey of 13 banks. The median estimate is 10.5 percent.

Brazilian traders expect the central bank to boost the rate more. Policy makers will raise it to about 12.7 percent by December, according to interest-rate futures data compiled by Bloomberg.

Those rates will lure carry-trade investors, Moran said.

By comparison, U.S. traders’ expect the Federal Reserve to raise its benchmark rate to no higher than 1.25 percent by year- end from today’s target range of zero to 0.25 percent, according to interest-rate future contracts on the Chicago Board of Trade.

To contact the reporter on this story:
Camila Fontana in Sao Paulo at cfontana@bloomberg.net
Last Updated: January 7, 2010 10:41 EST
Brazil Carry-Trade Flows to Climb, StanChart Says

Gross Says Brazil Debt Attractive, Rates ‘Significantly High’ - Bloomberg.com

2010-01-06T18:33:00.000-05:00

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"

BNDES Sells $1 Billion of Bonds in Overseas Markets

2010-01-05T17:48:00.002-05:00

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...]

Brazil Air Force prefers Swedish jets-report | Reuters

2010-01-05T09:29:00.000-05:00

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

Brazil Sovereign Fund Can Buy Dollars in Spot Market

2009-12-30T16:40:00.000-05:00

Dec. 30 (Bloomberg) -- Brazil’s so-called sovereign wealth fund can be used to make purchases of dollars in the spot market, Treasury official Cleber Oliveira said.

Under a decree published yesterday in the official gazette, the fund’s managers will need authorization from the ministries of finance and planning, as well as the central bank, to make the purchases, said Oliveira, an undersecretary of the Treasury in charge of fiscal planning.

Brazil is seeking to have the fund operational in 2010, Oliveira told reporters today in Brasilia. The fund had 16.3 billion reais ($9.35 billion) on Dec. 24, he said."

more: Brazil Sovereign Fund Can Buy Dollars in Spot Market

Brazil’s President Lula Signs Decree Creating Sovereign Fund

2009-12-29T08:50:00.000-05:00

Brazil’s President Lula Signs Decree Creating Sovereign Fund

Dec. 29 (Bloomberg) -- Brazil’s President Luiz Inacio Lula da Silva signed a decree creating the country’s sovereign fund.

Brazil set the six-month London interbank offered rate, or Libor, as minimum return for the fund’s investments abroad, according to the decree published in the government’s official gazette today. The country set its long-term interest rate, or TJLP, as the minimum return for the fund’s investments in the local market.

Brazil’s sovereign fund will buy only investment grade assets rated by at least two agencies.
Last Updated: December 29, 2009 04:51 EST"

Lemann, Telles, Sicupira to pay record Brazil fine

2009-12-24T14:23:00.000-05:00

Lemann, Telles, Sicupira to pay record Brazil fine
RIO DE JANEIRO, Dec 24 (Reuters) - Brazilian financial tycoons Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Alberto Sicupira agreed to pay 18.6 million reais ($10.6 million) to settle a five-year old case where they were accused of abuse of power as controlling shareholders of beverage company AmBev (AMBV4.SA), the country's securities regulator said on Thursday.

The fines, among the highest ever paid by individuals in a financial lawsuit in Brazil, stemmed from a complaint filed in 2004 by Previ, Latin America's largest pension fund, against terms of the sale of AmBev to Belgium's Interbrew and the takeover of Canadian brewer Labatt, the regulator said.

Lemann, a Brazilian billionaire listed by Forbes magazine as the third wealthiest person in the country, Telles and Sicupira each agreed to pay 5 million reais to settle accusations that they wrongfully used a stock options plan to increase their stake in AmBev (ABV.N) and failed to meet their fiduciary duties, the regulator said in a statement.

Sicupira, the ninth richest Brazilian according to Forbes, also agreed to pay an additional 3.03 million reais to settle an accusation of conflict of interest. The regulator, known as CVM, said he should have abstained from voting in a board meeting that approved terms of the takeover of Labatt by AmBev because he was also a controlling shareholder of the Brazilian company.

Lemann and Telles, the seventh wealthiest Brazilian according to Forbes, also agreed pay each 285,000 reais to settle an accusation that they gave wrong information to the securities regulator regarding the Labatt purchase.

Brazil's securities regulator has stepped up its probe of insider trading and other types of fraud in the country as more individuals choose to put funds in the country's booming stock market. The regulator in October slapped a 19.2 million-real fine, the second-biggest ever in the country, on Credit Suisse (CSGN.VX) to settle an insider trading case.

Telles, Lemann and Sicupira founded Brazilian investment bank Garantia, which was sold to Credit Suisse in 1998, before making a fortune in the beer industry through a series of mergers and acquisitions that formed Anheuser-Busch InBev (ABI.BR). The three are among the largest individual owners of AB-Inbev.

Brazil's securities regulator also said six other AmBev executives agreed to pay a total 1.4 million reais to settle accusations they didn't fulfill their duties in regards to the takeover of Labatt.

Among those executives, Luis Felipe Dutra, AB-Inbev's current chief financial officer who was AmBev's director of investor relations at the time, agreed to pay 400,000 reais. ($1=1.753 reais) (Reporting by Elzio Barreto; Editing by Tim Dobbyn)"

Brazil Total Federal Debt Up 1.3% To BRL1.49 Tln In November

2009-12-22T13:33:00.000-05:00

Brazil Total Federal Debt Up 1.3% To BRL1.49 Tln In November

BRASILIA (Dow Jones)--Under the impact of net debt issuance and interest accrual Brazil's total federal debt load rose by 1.3% to 1.49 trillion Brazilian reals ($837 billion) in November, the government reported Tuesday.

In a joint statement, Brazil's central bank and treasury said the country's domestic federal debt load denominated in reals rose 1.4% from October to BRL1.39 trillion.

The government reported the overall increase in domestic federal debt came alongside BRL7.92 billion in net debt issuance and BRL11.13 billion in interest accrual. -

Meanwhile, Brazil's outstanding federal debt overseas rose 0.4% from October to BRL102 billion.

Regarding the profile of federal domestic debt in November, treasury officials reported floating-rate debt fell to 37.39% of total domestic debt during the month from 37.66% in October.

At the same time, the share of fixed-rate debt rose to 32.47% from 31.23%.

The share of inflation-indexed bonds fell during the month of November to 28.21% of debt from 29.16%, while exchange-linked debt fell to 0.71% of the total from 0.72% the previous month.

Brazil's government has been attempting to lengthen its debt profile and reduce its exposure to interest-rate risk through increased sales of fixed-rate and inflation-indexed debt.

The government reported Tuesday that average maturity of domestic debt fell to 3.37 years in November from 3.42 years in October.

At the same time, however, the government said the volume of domestic debt maturing in the coming 12 months fell in November to 25.87% from 26.55%.

The average cost of debt coming due in the next 12 months fell to 10.86% annually from 11.15% annually.

The November federal debt figures released Tuesday represent a key element of consolidated public-sector debt figures scheduled for release next week.

Brazil posted net consolidated public sector debt in October of BRL1.33 trillion, equivalent to 44.8% of gross domestic product.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, gerald.jeffris@dowjones.com"

Brazil Central Bank Sees 2010 Growth At 5.8%, IPCA At 4.6% - WSJ.com

2009-12-22T10:29:00.000-05:00

Brazil Central Bank Sees 2010 Growth At 5.8%, IPCA At 4.6%

BRASILIA (Dow Jones)--Responding to the influence of strong local economic stimulus and an incipient global recovery, Brazil's economy should grow by 5.8% in 2010 from near zero this year, while inflation will accelerate to above the country's 4.5% annual inflation target, Brazil's central bank said Tuesday in its fourth-quarter inflation report.

The central bank revised its forecast for 2009 IPCA consumer price inflation upward to 4.3% from 4.2% seen earlier and lifted its projection for 2010 IPCA inflation to 4.6% from 4.4%. Meanwhile, it revised its economic growth projection for 2009 lower, to 0.2% from 0.8% seen in the previous report.

The monetary authority said the latest forecasts were based on an improving outlook abroad as well as a continued firm economic rebound locally.

'The scenario is based on a medium-term recovery in global economic activity on the external front, as well as continued expansion within a benign inflation environment on the domestic side,' the bank said. 'From the point of view of risks related to the inflation outlook, the main risk comes from the intensity of a domestic economic recovery, which will undergo still more important influence from economic policy stimulus.'

The bank, meanwhile, confirmed market expectations that inflation pressure could remain strong as the local economy stages a recovery, projecting 2011 inflation to remain above target at 4.6%.

The latest projections released by the central bank were based on an exchange rate of 1.75 Brazilian reals per dollar and a reference Selic interest rate of 8.75% annually.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, gerald.jeffris@dowjones.com"

Brazil's BTG may bid for asset manager BRZ-report | Reuters

2009-12-22T09:36:00.000-05:00

Brazil's BTG may bid for asset manager BRZ

SAO PAULO, Dec 22 (Reuters) - BTG Pactual, the securities firm controlled by Brazilian banking wunderkind Andre Esteves, is in talks to buy Sao Paulo-based asset management firm BRZ Investimentos, magazine Veja said on its Tuesday online edition.

Stocks | Mergers & Acquisitions | Bonds | Global Markets | Private Capital | Financials

Veja's Radar column, where the information was published, didn't give any terms for the transaction. GP Investments controls about 60 percent of BRZ, with the remaining 40 percent still belonging to a group of managing partners led by Nelson Rozental and Marcos Falcao.

BRZ has about 3 billion reais ($1.7 billion) in assets under management.

Spokeswomen for BRZ and GP Investments declined to immediately comment on the Veja report. A BTG Pactual spokeswoman did not answer calls requesting comments on the Veja report.

BRZ Investimentos, which was spun off about two years ago from Latin America's largest private equity firm GP Investments (GPIV11.SA), has been struggling in recent weeks after suspending redemptions on a private credit fund it oversees following massive withdrawals, according to local media reports. ($1=1.78 reais) (Reporting by Guillermo Parra-Bernal; Editing by Hans Peters)"

Emerging-Market Bond Yield Spreads Decline on Global Recovery - Bloomberg.com

2009-12-21T22:41:00.000-05:00

Dec. 21 (Bloomberg) -- The yield gap on emerging-market debt fell the most in almost two months on speculation the global economic recovery is gathering strength.

The extra yield investors demand to own developing-nation debt over U.S. Treasuries declined 14 basis points to 2.90 percentage points by 5 p.m. in New York, according to JPMorgan Chase & Co., the biggest drop since Oct. 29. The MSCI Emerging Markets Index dropped 0.4 percent to 946.42 after a gain in the dollar reduced the appeal of commodities including oil and sugar as alternatives.

more: Emerging-Market Bond Yield Spreads Decline on Global Recovery

LATAM WEEKAHEAD-Brazil Q4 inflation report key for rate outlook | Reuters

2009-12-20T18:21:00.000-05:00

LATAM WEEKAHEAD-Brazil Q4 inflation report key for rate outlook

NEW YORK, Dec 20 (Reuters) - Investors will be cautiously monitoring a key fourth-quarter inflation report to be released by the Brazilian central bank on Tuesday, looking for signs that a recent batch of positive economic indicators might force policy-makers to raise rates earlier than expected.

The Brazilian central bank so far has said it is comfortable with the inflation outlook for 2010, which could allow the benchmark Selic rate to remain at its all-time low of 8.75 percent for a long time.

But investors in the market of interest rate futures have been pricing a hike of at least 150 basis points as early as in the first half of the year, especially after Brazilian data on retail sales and job creation exceeded expectations last week.

"With Brazil's economic recovery continuing to show strong momentum, anchored by solid domestic demand boosted by this year's strong jobs recovery, re-accelerating growth and fiscal stimulus, expectations are high that the central bank will begin hiking rates in the first half of 2020," RBC Capital Markets said in a report.

Other key data points investors will be watching this week are:

Tuesday Dec. 22

* Brazil - central bank Q4 inflation report

Wednesday Dec. 23

* Brazil - IPCA 15 inflation: Barclays Capital expects mid-month consumer inflation in Brazil to slow down to 0.3 percent in December, after a 0.44 percent reading in the previous period.

By Walter Brandimarte

Banco do Brasil Is in Talks to Buy U.S. Bank, CEO Tells Valor - Bloomberg.com

2009-12-17T09:21:00.000-05:00

Banco do Brasil Is in Talks to Buy U.S. Bank, CEO Tells Valor

Dec. 17 (Bloomberg) -- Banco do Brasil SA is in talks to buy the U.S. assets of a foreign bank in distress, Valor Economico reported, citing an interview with Chief Executive Officer Aldemir Bendine.

While Bendine declined to identify the bank, he said it has 14 branches in the U.S., the Sao Paulo-based newspaper reported.

Banco do Brasil is planning also to expand through acquisitions or by opening its own operations in Peru, Colombia, Paraguay, Uruguay, Angola and Mozambique, Valor reported the CEO as saying. In Europe, the bank aims to boost its business through a Vienna-based subsidiary, he said.

Banco do Brasil announced talks to buy a stake in Argentina’s Banco Patagonia earlier this week.

To contact the reporter responsible for this story: Camila Fontana in Sao Paulo at cfontana@bloomberg.net
Last Updated: December 17, 2009 04:47 EST"

Paraguay-Brazil Energy Treaty Going Nowhere Fast - NYTimes.com

2009-12-16T23:47:00.000-05:00

Paraguay-Brazil Energy Treaty Going Nowhere Fast

ASUNCION, Paraguay (AP) -- It's been nearly five months since the presidents of Brazil and Paraguay agreed on a breakthrough deal to triple Paraguay's income from the world's second-largest hydroelectric dam, but the money won't be flowing anytime soon.

The treaty would increase Paraguay's income from energy generated by the Itaipu dam on the shared Parana River to $360 million, money that Paraguay's President Fernando Lugo wants to spend on agrarian reform to benefit 300,000 landless peasant families.

It also calls for Brazil to invest in high-capacity power lines across Paraguay, creating an energy grid that could help one of South America's poorest countries reshape its agricultural economy.

The treaty, signed by Lugo and Luiz Inacio Lula Da Silva on July 25, was quickly approved by Paraguay's congress, but lawmakers in Brazil have yet to move the plan out of the first of four committees due to consider it -- partly because what Brazil mostly gets from the deal is good relations with its poorer neighbor.

''It is controversial. It's not a simple matter, because it carries more benefits for Paraguay than Brazil,'' Brazilian Rep. Severiano Alves, a member of the lower house's foreign relations committee, told The Associated Press.

He said both houses of Congress would probably vote on it in the first half of 2010.

Carlos Mateo Balmelli, Itaipu's Paraguayan director, has lobbied for the agreement, but Alves says Brazil should not be pressured.

''They didn't pay anything to build the dam -- they just provided territory and water from the river. Brazil was the one that assumed the cost of financing Itaipu,'' Alves said.

Itaipu's 20 huge turbines generate electricity divided equally between the neighbors, but Paraguay's much smaller population and economy consumes the energy of only one turbine. The current treaty forces Paraguay to sell its excess capacity to Brazil until 2023, without the possibility of selling the energy elsewhere, at far less than market prices.

The new treaty would increase Paraguay's income from $5.10 to $15.30 per megawatt/hour for excess power sold to Brazil. Lugo said the proposal has already succeeded in overcoming Paraguay's

isolation, a legacy of Alfredo Stroessners 1954-1989 dictatorship.

The existing treaty was signed in 1973, before the dam was built. Both countries took on loans to build it -- debt that now totals $17 billion. But Paraguay doesn't recognize $8 billion of it because it considers the debt to be illegally obtained by corrupt officials of the former government.

------

Associated Press Writer Marco Sibaja in Brasilia, Brazil contribued to this story.

By THE ASSOCIATED PRESS

Published: December 16, 2009

Brazil Holds TJLP Long-Term Interest Rate Unchanged At 6.00% - WSJ.com

2009-12-16T15:05:00.000-05:00

Brazil Holds TJLP Long-Term Interest Rate Unchanged At 6.00%

BRASILIA (Dow Jones)--Brazil will maintain its TJLP long-term interest rate unchanged at 6.00% annually for the first quarter of 2010, the country's National Monetary Council, or CMN, announced Wednesday.

The TJLP, used on loans to businesses made by the government-backed Brazilian National Development Bank, has been held unchanged since the second quarter this year. The rate normally is based on expectations for inflation plus risk spreads on the country's sovereign debt. The government, however, didn't reveal the composition of the rate.

According to recent Brazilian central bank market surveys, Brazil's IPCA consumer price inflation is seen at around 4.5% over the coming 12 months.

Brazil's sovereign debt spreads, according to the J.P. Morgan Emerging Markets Bond Index Plus, stood at 191 points over U.S. Treasurys at Tuesday's market close.

The CMN is the Brazilian government's highest-ranking economic policy-making body. It's chaired by Finance Minister Guido Mantega and also includes Central Bank President Henrique Meirelles and Planning Minister Paulo Bernardo. The council reviews the TJLP rate every three months.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832; gerald.jeffris@dowjones.com

Reservas crescerão menos em 2010

2009-12-16T13:18:00.000-05:00

Reservas crescerão menos em 2010

Os analistas de bancos são unânimes em apostar que o Brasil vai continuar a ter sobras de dólares em 2010 e que as reservas internacionais (o caixa do país em moeda estrangeira) vão continuar a crescer. Isso apesar das previsões de um déficit maior em conta corrente (que mede o comércio de bens e serviços) e de mais recursos externos necessários para financiá-lo.

Neste ano, o Banco Central já comprou US$ 25,572 bilhões no mercado interno de câmbio até o dia 4 de dezembro, segundo o último dado disponível. Absorveu parte importante do fluxo positivo de dólares ao país. Para 2010, as estimativas de bancos ouvidos pelo Valor são de que a autoridade monetária vai continuar a adquirir a moeda americana, mas em valores menores do que isso: de US$ 15 bilhões a, no máximo, US$ 20 bilhões.
Foto Destaque

As reservas internacionais, onde são contabilizados esses dólares adquiridos, devem crescer menos do que os US$ 38,3 bilhões até agora neste ano. Devem passar dos US$ 240 bilhões no final de 2009 para US$ 270 bilhões em 2010, com aproximadamente US$ 10 bilhões representando a própria valorização dos ativos nos quais o dinheiro das reservas é aplicado pelo Banco Central."

Cristiane Perini Lucchesi, de São Paulo Valor Online

Brazil Interest Rate Future Yield Rises to Highest in 10 Months - Bloomberg.com

2009-12-16T12:23:00.002-05:00

Brazil Interest Rate Future Yield Rises to Highest in 10 Months

Dec. 16 (Bloomberg) -- ...
Policy makers lowered the benchmark rate to a low of 8.75 percent in July. Brazilian economists expect an increase to 10.63 percent by the end of next year, according to a weekly central bank survey published on Dec. 14.

The real was little changed at 1.7513 per dollar at 9:44 a.m. in New York, from 1.7520 yesterday.
To contact the reporter responsible for this story: Camila Fontana in Sao Paulo at cfontana@bloomberg.net

Cinco municípios responderam por 25% do PIB do país em 2007, nota IBGE

2009-12-16T10:59:00.000-05:00

Cinco municípios responderam por 25% do PIB do país em 2007, nota IBGE

RIO - Cinco municípios responderam por aproximadamente 25% de toda a renda gerada pelo país em 2007. De acordo com o PIB dos Municípios Brasileiros 2003-2007, divulgado hoje pelo Instituto Brasileiro de Geografia e Estatística (IBGE), São Paulo respondeu, em 2007, por 12% do PIB brasileiro, enquanto Rio de Janeiro ficou com 5,2%; Brasília com 3,8%; Belo Horizonte com 1,4% e Curitiba com 1,4%.

A pesquisa mostra ainda que os 45 municípios mais ricos do país responderam em 2007 por quase metade do PIB, agregando 30,5% da população brasileira. Já os 1.342 municípios com a menor participação relativa foram responsáveis, em conjunto, por 1% do PIB, contando com 3,5% da população do país.

Entre as regiões, a mais desigual em 2007 era a Centro-Oeste, onde Brasília respondeu por 42,4% do PIB regional. Retirando Brasília do cálculo, 16 outros municípios agregaram 50% das riquezas da região. No Norte, sete municípios foram responsáveis por 50% do PIB, enquanto, no Nordeste, foram necessários 21 municípios para atingir 50% do PIB; no Sul, foram 27 e no Sudeste, 13.

De acordo com o IBGE, os cinco municípios com menor PIB foram Olho D´Água do Piauí, São Luís do Piauí, Areia de Baraúnas (Paraíba), São Miguel da Baixa Grande (Piauí) e Santo Antônio dos Milagres (Piauí).

O conjunto das capitais brasileiras representava, em 2007, 34,4% da renda nacional, sendo que as capitais no Norte foram responsáveis pro 2,4% do total; as do Nordeste por 4,5%; as do Sul por 2,9%; as do Centro-Oeste por 5,1%; e as do Sudeste por 19,4%. Apenas Florianópolis, em Santa Catarina, não apresentou o maior PIB do Estado, ficando atrás de Joinville e de Itajaí.

No total, o país fechou o ano de 2007 com 25 municípios com participação superior a 0,5% do PIB do país. Deste total, dez (São Paulo, Osasco, São Bernardo do Campo, Santos, Jundiaí, Campinas, São José dos Campos, Santo André, Barueri e Guarulhos) ficam no Estado de São Paulo; três no Rio de Janeiro (Rio de Janeiro, Duque de Caxias e Campos dos Goytacazes); dois em Minas Gerais (Belo Horizonte e Betim) e mais as capitais Curitiba, Vitória, Recife, Goiânia, Belém, Salvador, Porto Alegre, Fortaleza, Brasília e Manaus."

Valor Online (Rafael Rosas | Valor)

16/12/2009 10:21

Spain's Elecnor to build 96 MW wind parks in Brazil | Markets | Reuters

2009-12-15T17:59:00.000-05:00

Spain's Elecnor to build 96 MW wind parks in Brazil

MADRID, Dec 15 (Reuters) - Spanish energy firm Elecnor (ENOR.MC) on Tuesday said it had won a contract worth 183 million euros ($266.1 million) to build five wind parks in Brazil.

The company added in a statement that the parks in the southern Brazilian state of Rio Grande do Sul would have a total generating capacity of 96 megawatts. (Reporting by Tomas Gonzalez; Writing by Martin Roberts)"

Brazil Sells $500 Million of Bonds to Yield 4.75%

2009-12-15T17:51:00.000-05:00

Brazil Sells $500 Million of Bonds to Yield 4.75%

Dec. 15 (Bloomberg) -- Brazil sold $500 million of 10-year bonds in the country’s fifth international dollar bond offering this year.

The South American country sold the bonds to yield 4.75 percent, down from 6.13 percent in an initial offering in January and from 5.80 percent in a second sale in May. Today’s yield was 1.14 percentage points more than U.S. Treasuries. The government said in a statement it plans to sell up to $25 million of the securities in Asian markets.

Brazil tapped debt markets as a global economic recovery fuels demand for the securities. Emerging-market debt sales rose 83 percent to a record $597 billion this year, according to Bloomberg data. Brazil is returning to overseas markets after Abu Dhabi’s bailout yesterday of Dubai World boosted demand for higher-yielding assets, said Paul Biszko, emerging-markets strategist at RBC Capital Markets in Toronto.

“Brazil is using Dubai as an opportunity to issue now versus a potentially even more volatile backdrop next year,” Biszko said.

The yield on Brazil’s 5.875 percent bonds due in 2019 fell to 4.65 percent from 6.44 percent on Jan. 8, according to JPMorgan Chase & Co. The bond’s price rose to 109.02 cents on the dollar from 95.90 cents during that period.

Morgan Stanley and Goldman Sachs Group Inc. arranged today’s bond offering, said a person familiar with the transaction who declined to be identified because he’s not allowed to speak publicly.

To contact the reporters responsible for this story: Francisco Marcelino at mdeoliveira@bloomberg.net; Veronica Espinosa in New York at vespinosa@bloomberg.net.
Last Updated: December 15, 2009 16:50 EST

Emerging-Market Debt Trading Rises 19%, EMTA Says - Business Exchange

2009-12-15T16:42:00.000-05:00

Emerging-Market Debt Trading Rises 19%, EMTA Says

Brazilian debt tallied the second-most trading volume, with $155 billion in turnover.

The extra yield investors demand to own developing-nation bonds instead of U.S. Treasuries shrank to 2.93 percentage points from 6.90 percentage points on Dec. 31, according to JPMorgan Chase & Co.’s EMBI+ Index.

Emerging-market corporate bond trading totaled $175 billion in the third quarter, a 98 percent increase from the same period last year, according to the survey.

To contact the reporters responsible for this story: Veronica Espinosa in New York at vespinosa@bloomberg.net.

Brazil Launches $500M 2019 Reopened Bonds At 4.75%

2009-12-15T14:44:00.001-05:00

Brazil Launches $500M 2019 Reopened Bonds At 4.75%
NEW YORK (Dow Jones)--Brazil launched $500 million of 2019 global bonds at 4.75% Tuesday, according to a person familiar with the deal.

The Brazilian Treasury announced Tuesday the reopening of its 2019 global sovereign bond, expanding the current $1.775 billion issue by $500 million. The coupon is 5.875%.

The books on the deal for New York and Europe were closed at about 11 a.m. EST and were said to be oversubscribed.

However, people familiar with the matter said the treasury has no intention of increasing the amount of the offer, even in the event of heavy demand.

The issue may only be increased during the Asian trading session by up to 5% for investors unable to participate during this time zone.

Morgan Stanley and Goldman Sachs are joint bookrunners on the issue.

Dedicated emerging-market investors weren't keen on participating, even though most are broadly optimistic on Brazil's economy as a whole.

'Brazil as country, we're quite bullish on fundamentals,' said one big fund manager. 'But the market has more than priced that in. So, generally, we're underweight Brazil.' However, they said that the fund will use this reopening to rebalance its portfolio.

Kevin Daly, an emerging market portfolio manager at Aberdeen Investment Managers in London, said: 'Brazil just doesn't yield anything. It's just ridiculously low.'

Interested investors are likely global government bond funds, crossover investors, and those that need to rebalance their portfolios if they have too much cash at the end of the year, he said.

Brazil first issued the 2019 bond in January with a volume of $1.025 billion. The bond came with a coupon rate of 5.875% and a yield of 6.13%. In May, the treasury reopened the 2019 bond, raising an additional $750 million at an annual yield of 5.8%.

Earlier this month, Treasury Secretary Arno Augustin told Dow Jones Newswires that Brazil's government was likely to issue another 10-year overseas bond before the end of the year.

'We are looking to build a better yield curve and improve the quality of our debt management,' Augustin said at that time.

Brazil's is enjoying its investment grade status to access the debt market. In September, Moody's Investors Service raised Brazil's sovereign credit rating to Baa3, an investment-grade rating, more than a year after Standard & Poor's and Fitch Rating elevated Brazil to investment grade.

-By Riva Froymovich, Dow Jones Newswires; 212-416-2217; riva.froymovich@dowjones.com

-By Tom Murphy and Rogerio Jelmayer, Dow Jones Newswires; 55-11-2847-4519; brazil@dowjones.com"

Pride sues Brazil's GP Investments for $44 mln | Reuters

2009-12-15T13:57:00.000-05:00

Pride sues Brazil's GP Investments for $44 mln

NEW YORK, Dec 15 (Reuters) - Pride International Inc (PDE.N), an oil and gas service company, sued Brazilian private equity firm GP Investments Ltd GPIV11.LU and its Argentine subsidiary for $44 million Pride said they owe in a stock purchase agreement.

The lawsuit filed on Monday in Manhattan federal court in New York said the agreement on Aug. 9, 2007, with Sao Paolo-based GP and San Antonio Oil & Gas Services Ltd of Buenos Aires was for the sale of Pride's Latin America land-based drilling, exploration and production services business.

Ernst & Young [ERNY.UL] accounting firm determined the amount owed after the closing of the deal and GP and San Antonio failed to meet a contractual deadline of Dec. 21, 2008 to pay, the lawsuit said.

'Despite continuing to tout their financial stability, success, and business principles to the international business and investment community, GP and San Antonio are apparently either unwilling or unable to pay the over $44 million owed to plaintiffs under the agreement,' the lawsuit said.

An attorney for GP Investments could not immediately be reached for comment.

The case is Pride International Inc et al v GP Investments Ltd, U.S. District Court for the Southern District of New York, No. 09-10174.

(Reporting by Grant McCool; Editing by Richard Chang)"

Brazil Corporate Bond Sales to Rise, Coutinho Says

2009-12-14T13:04:00.002-05:00

Dec. 14 (Bloomberg) -- Brazil’s local-currency corporate debt market is poised for a “golden year” in 2010 as investor appetite for longer-maturity real-denominated assets increases, said Luciano Coutinho, president of the state development bank.

Brazil has “great potential” for a secondary market for corporate bonds, and BNDES, as the development bank is known, is prepared to help build it, Coutinho said. Larger Brazilian companies with “good” credit ratings will be able to issue real-denominated debt next year in addition to selling shares, Coutinho said.

“We expect 2010 will be a golden year for the development of the corporate bond market,” Coutinho told reporters in Sao Paulo. “The capital markets have robust and immediate opportunities for expansion.”

more: Brazil Corporate Bond Sales to Rise, Coutinho Says

BTG to create Brazil infrastructure fund-executive | Reuters

2009-12-11T20:37:00.000-05:00

BTG to create Brazil infrastructure fund-executive

SAO PAULO, Dec 11 (Reuters) - BTG Pactual, the securities firm led by Andre Esteves, is set to launch a private equity-backed Brazilian infrastructure fund, to take advantage of massive road, port and dam projects, a senior executive said.

Private Capital

'With expectations of growth coming around 5 percent next year, the need for infrastructure investment will be huge,' Eduardo Cutolo, an executive director at Sao Paulo-based BTG Pactual, told reporters late on Thursday.

Private equity investment is expected to grow next year as the country's growth prospects and declining interest rates draw a new class of risk-hungry investors.

Brazil makes up for about half of Latin America's gross domestic product and in the past four years represented 45 percent of all private equity investments in the region, according to Emerging Markets Private Equity Association data.

Cutolo did not give details on the terms or size of the fund.

Esteves and his partners sold Rio de Janeiro-based Pactual to UBS AG (UBSN.VX) in 2006 and later became global head of fixed-income, currencies and commodities at the Swiss bank. He formed BTG last year with some of his former partners at Pactual.

Less than four months after quitting his UBS job in 2008, Esteves and his partners in BTG moved to buy Lehman Brothers Inc.'s Brazil unit to expand its trading muscle. BTG bought back Pactual from UBS for about $2.5 billion in a deal concluded in September this year.

The bank aims at taking up the slack left by global investment funds and banks that had to flee emerging markets amid the worst financial crisis in eight decades. Cutolo reiterated that BTG Pactual wants to become the largest emerging markets-based securities firm in a few years. (Reporting by Aluisio Alves; Writing by Guillermo Parra-Bernal; editing by Simon Jessop)

Brazil’s Real to Surpass 1.50 Per Dollar, Booth Says

2009-12-11T16:57:00.001-05:00

Dec. 11 (Bloomberg) -- Brazil’s real may appreciate “way past” 1.50 per U.S. dollar next year as investors flock to Latin America’s largest economy, said Ashmore Group Plc’s Jerome Booth.

Brazil’s benchmark interest rate may climb by 2 percentage points next year from a record low of 8.75 percent, Booth, chief of research at the London-based firm that oversees $31 billion of assets, said in a telephone interview.

“Brazilian rates are going to go up, but they’re not going to go up the 400 basis points that some people think,” Booth said. “The currency I would expect to rally considerably. Way past 1.50.”

...“The perception of risk needs changing radically,” Booth said. “The investor that is thinking of maybe putting 5 percent in emerging markets needs to rethink and realize that being 95 percent in developed markets is very risky.”

more: Brazil’s Real to Surpass 1.50 Per Dollar, Booth Says

Agência Senado - 09/12/2009 - Promulgada emenda dos precatórios

2009-12-09T13:05:00.000-05:00

Agência Senado - 09/12/2009 - Promulgada emenda dos precatórios

CONGRESSO
09/12/2009 - 11h31

Promulgada emenda dos precatórios

Em sessão solene presidida pelo deputado Marco Maia (PT-RS), vice-presidente da Câmara dos Deputados, o Congresso Nacional promulgou, na manhã desta quarta-feira (09), a Emenda Constitucional 62/09, que altera as regras para pagamento de precatórios, como são chamadas as dívidas judiciais da União, estados, Distrito Federal e municípios. Leu o texto o deputado Inocêncio Oliveira (PR-PE), 1º secretário da Câmara.

A emenda cria um regime especial segundo o qual a quitação dos precatórios alimentares e de menor valor terá prioridade sobre os demais. O texto promulgado também obriga os municípios a destinarem entre 1% e 1,5% de suas receitas correntes líquidas para o pagamento dos precatórios. Esse percentual, para os estados, fica entre 1,5% e 2%. A emenda estabelece ainda que os valores das dívidas sofrerão atualização monetária de acordo com as regras da caderneta de poupança.

Conforme o estabelecido pela emenda, 50% dos recursos dos precatórios serão usados para pagamento conforme ordem cronológica e à vista. A outra metade da dívida deverá ser quitada por meio de leilões, onde o credor que conceder o maior desconto sobre o total da dívida a receber terá seu crédito quitado primeiro. Também estão previstos pagamentos por ordem crescente de débito ou por conciliação entre as partes.

Teresa Cardoso / Agência Senado
(Reprodução autorizada mediante citação da Agência Senado)

Rates Rise As Brazil Sells BRL1.25B NTN-Bs At 6.26%-6.83% - WSJ.com

2009-12-08T13:19:00.000-05:00

Rates Rise As Brazil Sells BRL1.25B NTN-Bs At 6.26%-6.83%

BRASILIA (Dow Jones)--Brazil's federal treasury sold BRL1.25 billion($714.2 million) worth of NTN-B inflation-linked bonds on auction Tuesday at a slightly higher range of interest rates than seen at recent auctions.

The government sold bonds with six maturities ranging from Nov. 2011, to May 2045 at average interest rates ranging from 6.26% to 6.83%. Those compared with rates ranging from 6.16% to 6.78% at an auction of similar maturities held on Nov. 24.

NTN-B bonds pay a rate equal to Brazil's official IPCA inflation rate plus an interest rate established at the auction.

Traders said the yields seen at Tuesday's auction reflected expectations of gradually accelerating inflation and rising interest rates for the coming year.

Brazil's 12-month IPCA consumer price inflation through mid-November rose 4.09% versus a 4.14% advance in the same period through mid-October.

The latest figure remained below the government's official inflation target of 4.5%, however recent market estimates have pointed toward accelerating inflation in the year ahead.

According to a weekly central bank market survey released Monday, IPCA inflation is seen ending 2010 at 4.48%. The same survey shows the country's reference Selic interest rate rising to 10.6% annually from a current 8.75%.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, gerald.jeffris@dowjones.com"

Brazil's Belo Monte Not Seen As Essential To Energy Demand - WSJ.com

2009-12-07T15:52:00.000-05:00

SAO PAULO (Dow Jones)--Brazil's lights will stay on whether or not the planned Belo Monte hydroelectric dam ever sees the light of day, some top sector analysts said Monday.
'Our view is that Brazil will not lack power supply if Belo Monte does not get built because thermoelectric power companies and wind power will be available to meet demand,' said Marcos Severine, a senior analyst at Itau Securities in Sao Paulo.

The drama over the 11,000 megawatt power station has many local pundits saying that Brazil will not meet energy demand right around the time the nation hosts the World Cup in 2014 and the Olympic games in 2016.

Although Brazilians are notorious for talking their country into a catastrophe, Walter Vitto, an industry consultant at Tendencias in Sao Paulo, said where Belo Monte fails, coal and natural gas will find their niche.

'We are not going to be facing the chaotic rolling blackouts we faced in 2000 and 2001,' he said. Back then, the government was reining in spending and private energy companies were not investing in expansion due to uncertainties over the new, regulated energy market policies being created at the time.

'There is certainly the risk that hydroelectric power won't be able to meet demand, but then the new natural gas, wind and coal fired plants will be able to make up for it,' Vitto said.

The Belo Monte dam was supposed to be auctioned off to bidders in December but that has been postponed because the environmental protection agency, Ibama, has not yet signed off on the project.

The dam will be Brazil's second largest power station behind the Itaipu dam in the south, which has installed capacity to generate 14,000 megawatts of electricity.

Later this month, the government will hold the so-called A-5 energy auction. The auction, designed to meet energy demand in five years' time, is dominated by natural gas and coal-fired power companies.

Nearly 80% of Brazil's electric power comes from hydroelectric dams.

-By Kenneth Rapoza, Dow Jones Newswires; 5511-2847-4541; kenneth.rapoza@dowjones.com"
Brazil's Belo Monte Not Seen As Essential To Energy Demand

Brazil Treasury Secretary: Overseas Bond Likely In December - WSJ.com

2009-12-06T22:28:00.000-05:00

Brazil Treasury Secretary: Overseas Bond Likely In December

SAO PAULO (Dow Jones)--Brazil's government likely will issue another overseas bond before the end of the year, Treasury Secretary Arno Augustin said Friday.

'We are looking to build a better yield curve and improve the quality of our debt management,' Augustin said in a telephone interview.

He said the bond likely would be denominated in U.S. dollars and carry a 10-year term. He said it was possible the government would reopen its 2019 bond. He didn't offer any idea about the size of the offer.

Augustin said the government was also studying a possible overseas bond denominated in the Brazilian real. 'This is on our agenda,' he said. 'However, it is not likely for the short term since rates for dollar-denominated bonds are so good right now. A real-denominated issue is possible in 2010.'

Brazil has accessed the international debt market four times this year. In January, Brazil issued $1.025 billion in global bonds due in 2019. The bonds were sold at a yield of 6.127%. In May, it reopened the operation, raising another $750 million at a yield of 5.8%.

In July, the treasury obtained $525 million from the issue of an overseas bond due in 2037, with a yield of 6.45%. At the end of September, it raised $1.27 billion with the issue of a global bond due 2041, with a yield of 5.8%.

In the September operation, the government took advantage of a sovereign upgrade by Moody's, tapping the international bond market to fill out its debt curve.

In September, Moody's Investors Service raised Brazil's sovereign credit rating to Baa3, an investment-grade rating, more than a year after Standard & Poor's and Fitch Rating did so.

Brazil has issued real-denominated bonds overseas before, most recently in May 2008. At that time, it raised 750 million Brazilian reals ($441 million) from the reopening of an existing 2028 bond.

'Given the current international environment of low interest rates, Brazil's government will continue its policy of repurchasing overseas debt,' Augustin said.

In 2008, Brazil repurchased overseas bonds with total face value of $1.2 billion.

'We would like to buy more, but investors seem like they want to hold on to their Brazilian paper,' Augustin said.

The treasury secretary said Brazil's government will release its annual domestic debt management plan at the beginning of 2010. 'I can already tell you at least one thing about the plan,' Augustin said. 'We will aim to reduce the debt-to-GDP ratio next year.'

The debt-to-GDP ratio was 44.8% as of Oct. 31, up from 36.0% at the end of 2008. Brazil's public sector debt rose this year because of the global recession, which caused a decline in tax revenue.

But Brazil's economy is expected to rebound in 2010. Most economists are expecting growth of 5% next year after an expansion of no more than 1% for 2009.

Regarding Brazil's volatile foreign exchange market, Augustin said, 'We are closely monitoring the exchange rate, and we will be ready to correct any distortions.'

The Brazilian real has gained about 35% against the U.S. dollar so far in 2009, causing worries for exporters.

Augustin said Brazil's government will continue its policy of systematic purchases of U.S. dollars in order to build foreign reserves. 'This policy will continue, managed by the central bank,' he said.

Brazil's reserves stood at $238 billion at the end of November, up $5 billion from the previous month.

-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-2847-4519; brazil@dowjones.com"

Governo pretende ousar na liberalização cambial

2009-11-26T09:23:00.002-05:00

Medidas em estudo avançado no governo devem permitir maior internacionalização dos bancos que operam no Brasil
A nova rodada de liberalização cambial, em estudo avançado no governo, deve contemplar medidas mais ousadas, que facilitem a saída de poupança doméstica para aplicações no exterior e permitam maior internacionalização dos bancos que operam no Brasil.

As propostas que estão sob avaliação de especialistas do governo são: autorizar os bancos brasileiros a emprestar a empresas no exterior recursos captados no mercado interno; remover entraves para que os bancos no Brasil operem com derivativos no mercado internacional; ampliar ou mesmo extinguir os limites para que os fundos multimercados apliquem no mercado externo; e ampliar o teto de aplicação dos fundos de pensão, recentemente autorizados a investir até 10% do patrimônio líquido em fundos de investimentos no exterior.

Esse conjunto de medidas - que deverá ser acompanhado por uma série de revogações de circulares e resoluções do Conselho Monetário Nacional (CMN) que instituíram regras cambiais próprias de uma economia carente de moeda estrangeira - representa uma segunda etapa no processo de liberalização do mercado de câmbio no país. As primeiras medidas se destinaram, em anos recentes, a facilitar o ingresso de moeda estrangeira no Brasil. Agora, as ações do governo estão dirigidas para a simplificação da saída de recursos.

Para que os bancos que operam no país possam emprestar a empresas no exterior, sejam as nacionais que se internacionalizam ou as estrangeiras, será preciso extinguir os mandamentos da circular nº 24, do Banco Central, que desde fevereiro de 1966 impõe, num só artigo, a proibição para que essas instituições emprestem poupança doméstica fora do país. O artigo diz: ' Comunicamos que é expressamente vedado às instituições financeiras, por qualquer forma, aplicar ou promover a colocação no exterior de recursos coletados no país'.

A circular nº 24 é parte da própria história do Banco Central, criado pela lei nº 4.595, em 1964. Na avaliação de fontes do governo, essa regra não condiz com a necessidade de o sistema financeiro doméstico acompanhar a internacionalização das empresas brasileiras.

Valor Econômico > Impresso > Caderno A
Claudia Safatle, de Brasília
26/11/2009

Governo pretende ousar na liberalização cambial

Nov. 26 (Bloomberg) -- The Brazilian government is planning measures to facilitate private investments abroad and to give local banks more freedom to make international transactions, Valor Economico reported, without saying where it got the information.
Authorities are evaluating proposals such as allowing local banks to lend abroad and to operate derivatives in the international markets, the Sao Paulo-based newspaper said. Other rules under consideration are ending limits for hedge funds to invest abroad and raising the limit for pension funds to buy foreign assets.
The proposals are part of a broader government effort to liberalize foreign-exchange transactions, Valor reported.
Calls by Bloomberg News to the Finance Ministry and the central bank weren’t immediately returned.
To contact the reporter responsible for this story: Camila Fontana in Sao Paulo at cfontana@bloomberg.net
Last Updated: November 26, 2009 05:17 EST

UPDATE: Brazil Boosts Support For IMF Facility To $14 Billion

2009-11-25T15:46:00.001-05:00

BRASILIA (Dow Jones)--Brazil will make available a total of $14 billion to the International Monetary Fund's NAB fund, up from the $10 billion originally planned, Finance Minister Guido Mantega said Wednesday.

NAB stands for the IMF's New Arrangements to Borrow and will contain total funding of some $600 billion. The NAB facility is meant to boost the IMF's lending resources during times of global financial stress.

'This money will be available to the IMF and it will be doled out as needed, rather than all at once,' Mantega said at a news conference. 'It's like an expense account.'

The NAB facility was originally planned to hold $500 billion, mainly from industrialized countries. But Brazil, along with a number of other emerging countries, has agreed to participate.

Mantega said, 'Brazil, Russia, China and India, the BRIC countries, will control 15% of the NAB fund. That equals virtually a veto power because decisions on how to use the fund need to be approved by holders of at least 85% of the stakes.'
-By Tom Murphy, Dow Jones Newswires; 55-11-2847-4519; brazil@dowjones.com"

Brazil Boosts Support For IMF Facility To $14 Billion

Brazil May Allow Some Funds to Invest 100% Overseas, Folha Says - Bloomberg.com

2009-11-20T09:01:00.000-05:00

Brazil May Allow Some Funds to Invest 100% Overseas, Folha Says

Nov. 20 (Bloomberg) -- Brazil’s government may allow so- called multimarket funds to invest entirely in overseas assets, eliminating a 20 percent limit on foreign holdings to help curb the appreciation of the real, Folha de S. Paulo reported, without saying where it got the information.

Multimarket funds are for high-risk investors and can hold fixed-income assets, currency, gold, shares, options and other financial instruments, Folha said.

Finance Ministry spokeswoman Patricia Mesquita declined to comment when contacted by Bloomberg News today.

To contact the reporter on this story: Laura Price in London at lprice3@bloomberg.net
Last Updated: November 20, 2009 05:54 EST"

Brazil Increase of IOF ‘Should Not Be Ruled Out,’ JPMorgan Says - Bloomberg.com

2009-11-19T08:15:00.000-05:00

Brazil Increase of IOF ‘Should Not Be Ruled Out,’ JPMorgan Says

Nov. 19 (Bloomberg) -- Brazil’s so-called IOF tax on the purchase of equity and fixed-income assets by foreigners may be expanded further to fight an appreciation in the currency, JPMorgan Chase & Co. said.

The extension of the tax to the creation of new depositary receipts, announced yesterday, shows that the IOF remains the key instrument to fight the real’s appreciation, and therefore IOF brackets that are higher or broader in scope should not be ruled out, wrote Sao Paulo-based Julio C. Callegari in a note.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Last Updated: November 19, 2009 07:31 EST"

JPMorgan Chase Names Berquo to Run Bank’s Businesses in Brazil - Business Exchange

2009-11-16T16:19:00.000-05:00

JPMorgan Chase Names Berquo to Run Bank’s Businesses in Brazil

Nov. 16 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank, named Claudio Berquo to run the firm’s investment bank, asset management and treasury and securities services businesses in Brazil.

Berquo, 48, will continue as head of the private bank in Brazil, Latin America’s largest economy, and report to Eduardo Cepeda in that role, according to an internal memo from Mary Erdoes, chief executive officer of the asset management unit, and Nicolas Aguzin, head of Latin America. Tasha Pelio, a spokeswoman for the New York-based bank, confirmed the memo’s contents.

JPMorgan is extending its reach internationally as rivals struggle to return to profitability. The bank is in talks to buy the half of U.K. brokerage Cazenove Group that it doesn’t already own, according to a person familiar with the matter.

“As strong as our business is in Latin America, there is still tremendous opportunity for growth, particularly in Brazil,” Erdoes and Aguzin said in the memo.

Berquo, who has been at JPMorgan for 15 years, was previously responsible for JPMorgan’s wealth management business in Brazil. Prior to that he was a senior executive in the investment bank, the memo said.

JPMorgan ranks fifth in Latin American equity sales this year, according to Bloomberg data. Brazilian economists raised their gross domestic product growth forecast to 5 percent in 2010, from 4.83 percent last week, according to a central bank survey of about 100 professionals.

To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net.
Last Updated: November 16, 2009 15:57 EST"