Brazil Forms Sovereign Wealth Fund Advisory Board - WSJ.com

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

Brazil Sovereign Fund Can Buy Dollars in Spot Market

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

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"

Brazil’s Real Falls on Speculation Government May Curb Gains - Bloomberg.com

Brazil’s Real Falls on Speculation Government May Curb Gains - Bloomberg.com
By Camila Fontana

Oct. 26 (Bloomberg) -- Brazil’s real slid for the first time in four days on speculation the government may take additional steps to curb the currency’s rally.

The real dropped 1 percent to 1.7350 per U.S. dollar at 3:08 p.m. New York time, from 1.7173 on Oct. 23. The decline cut the currency’s appreciation this year to 33 percent. Last week the government imposed a 2 percent tax on foreign purchases of stocks and fixed-income securities.

“The market is wondering what the government is going to do after we break the 1.7 barrier,” said Paulo Petrassi, manager of fixed income investments at Leme Investimentos. The government may increase the tax rate on foreign inflows, he said in a phone interview from Florianopolis.

A spokeswoman from the Finance Ministry in Brasilia who declined to give her name said new measures to contain the real’s gains are not off the table, but that no announcement is imminent.

Brazilian authorities will most likely use the country’s sovereign fund to buy dollars in an effort to stop the currency from climbing even further, said Antonio Madeira, chief economist at MCM Consultores Associados in Sao Paulo.

Fixed income manager Rafael Correia of GAP Asset Management said in a phone interview from Rio de Janeiro that if the Brazilian currency reaches 1.8 per dollar, it will be a good opportunity to buy reais again.

The real opened higher and reached 1.7020 in early trading. The proximity to 1.7 prompted many local investors to buy dollars to prevent losses, said Roberto Kropp, a director at Daycoval Asset Management in an interview from Sao Paulo. The central bank bought dollars in the spot market today for 1.7059 reais each.

In the overnight interest-rates futures market, the yield on the contract due January 2011 rose four basis points, or 0.04 percentage point, to 10.28 percent, according to Bloomberg data.

To contact the reporter responsible for this story: Camila Fontana at cfontana@bloomberg.net
Last Updated: October 26, 2009 15:24 EDT"