Brazil’s central bank will keep its Selic rate unchanged at 13.75% Wednesday, say Merrill Lynch, UBS Pactual and Goldman Sachs. On Wednesday, Copom will announce its last monetary policy decision for 2008. The latter yesterday altered its forecast. “Although we continue to believe that the Copom should raise Selic rate by 50bp to 14.25%, we now believe that Copom will likely keep Selic unchanged at 13.75%,” says Goldman, adding that the decision will be unanimous and without a bias. The shop adds that this week, the government may announce a new package of measures to boost the economy, including efforts to boost commercial bank credit to the private sector; reduce lending rates by commercial banks, plus additional measures to reduce effective reserve requirements, and fiscal measures to assist corporates. “We now forecast that Copom will keep Selic unchanged at 13.75% until September 2009,” says Goldman.
Yearly Archives: 2008
Positivo Jumps on Sale Rumors
Shares of Brazilian computer manufacturer Positivo Informatica jumped to BRL6.16 Monday from the BRL4.75 Friday close, a 29.7% leap, following media reports that Lenovo Group and Dell are interested in acquiring it. A Positivo spokesperson denies the reports, saying that the company has “no knowledge” of such an approach. Local press reported the M&A rumor over the weekend, citing UBS Pactual as a Positivo advisor. Brazil’s Bovespa closed 8.31% firmer at 38,284 Monday amid global equity markets strength.
Prolec Buys Stake in Indo Tech
Mexico’s Prolec-GE, a joint venture between General Electric and Xignux, has agreed to buy a 54.35% stake in Chennai-based Indo Tech Transformers. It has also initiated a public offer to acquire an additional 20.00% stake in the Indian company. Citi, the offer manager, says in a letter to the Indian stock exchange that the value of the 54.35% stake amounts to R2.3bn or almost $48m. The additional 20% stake is valued at about $17.6m.
Deutsche Pares LatAm Team
Deutsche Bank’s LatAm franchise did not escape the shop’s global headcount reduction, understood to be going on through the middle of this week. A senior FX trader and two of Deutsche’s main LatAm corporate bond traders have left the firm. London-based Connor Kelly, MD and head of LatAm and EEMEA FX options trading, has been let go after only 5 months at the shop. He was previously at Goldman. New York-based Chris Landon, a VP who traded corporate bonds in Brazil, Argentina and some higher yielding credits in Mexico is gone, while Tommy Fitzpatrick, a London-based trader and VP covering corporates in Argentina and Mexico, has also left involuntarily. A second New York-based trader, as well as 2 other London executives in the trading group are also understood to have left, say people familiar with the process. In Santiago, Matias Poblete, a VP covering local clients for banking and capital markets deals, has also departed. A Deutsche spokeswoman declines to comment on the departures and replacements for the LatAm trading coverage were not made clear. Deutsche has seen a series of unrelated departures in trading and fixed income this past year. Carlos Planas, head of treasury and fixed income trading in Buenos Aires, left for Bulltick’s asset manager. Douglas Chen, a director in DCM based in New York, left for Itau Securities in August. A team of Brazil trading and structuring executives headed by Alexandre Aoude bolted for Itau BBA in Sao Paulo in March, while Sao Paulo-based structuring and securitization executives Brigitte Posch and Roberto Watanabe left for buyside and ABS shops. In September, RBS poached a team of 3 headed by Ricardo Bicudo from the Sao Paulo office for its new sales and trading effort in Brazil. Deutsche has also added selectively to its LatAm team, though fewer people than have departed.
Paraguay Going Ahead with Corpus
Paraguay will begin the bidding process for the hydroelectric project Corpus Christi in “the next months,” Carlos Buttner, the country’s vice minister of mines and energy, tells LatinFinance. He estimates the investment needed for the project to be around $8bn. Buttner says there is still no financing in place for the project, but that the country’s parliament is studying possible options.
IDB Supports Bahia
The IDB has approved a $409m loan to Brazil’s Bahia state to implement a fiscal modernization program that will include measures to boost tax collection, improve spending controls, and enhance its public debt profile. A first disbursement of $209m will be used to improve the public debt profile and cut payment service by eliminating the residual debt obligations stemming from a 1997 debt agreement with the federal government, says the IDB. A second disbursement of $200m will support improved fiscal management measures, helping the state meet the goals set in its fiscal adjustment program and in the fiscal responsibility law. The loan will help improve cash management, enhance mechanisms to boost tax collection on the state’s vehicle property tax, as well as finalize the implementation of a debt management system and an electronic tax invoice system for large taxpayers.
LatAm Equity Funds Keep Sliding
LatAm equity funds lost $91.0 million in the first week of December, while EM equity funds sustained outflows of $553.4m in the same period, or 0.3% of total assets, bringing year to date outflows to $41.7bn, says EPFR Global. “So far in 2008 investors have taken back nearly half of all net contributions to emerging market equity funds that were contributed in the previous five years,” says the fund tracker. By returns, LatAm equity funds registered a severe 13.73% drop for the week ended December 4 and a year-to-date drop of 63.36%, making it the worst performer of all world equity funds, according to Lipper. EM equity funds are the second-worse performers for the week and year-to-date, dropping 5.45% and 60.86% respectively. Global small and mid-cap equity funds, meanwhile, dropped 4.57% during the week and 50.29% year-to-date. The average slide for all world equity funds for the week is 4.64% and 51.89% year-to-date.
Homex, Estacio Name New CFOs
Homex has named Carlos Moctezuma as CFO, replacing Alan Castellanos who stepped to pursue other opportunities. Moctezuma has been with the Mexican homebuilder for 5 years, most recently as director of strategic planning. Homex also named Hector Cuen as Treasurer. Cuen is experienced in debt and capital markets and other areas of investment and treasury operations, Homex says. Elsewhere, Brazilian education management company Estacio has named Eduardo Alcalay CEO, following the resignation of Joao Carlos de Castro Rosas for personal reasons. Following a BRL447m IPO in 2007, Estacio sold a 20% stake to GP Investments for BRL259m in May.
Boettcher Tapped to Lead BoNY LatAm
Bank of New York Mellon has appointed Rene Boettcher as chairman of the LatAm region. He will continue to serve as head of client management for LatAm, reporting to Bill Williams, head of developing markets client management. Karen Peetz, chief executive officer of financial markets and treasury services, will be the executive committee sponsor for Latin America. Boettcher joined BoNY’s depositary receipt business in 1996. The following year he moved to Brazil to become country manager for depositary receipt and corporate trust-related sales and relationship management efforts. He returned to New York in 2005 to head sales and marketing for LatAm within the depositary receipt business. In January 2007, he became head of client management for LatAm. “International expansion continues to be one of our strategic priorities, and Latin America is a region that is host to some of the fastest developing economies in the world,” says Robert Kelly, BoNY’s chairman and CEO. The bank has rep offices in Brazil, Mexico, Chile and Argentina and holds a banking license in Mexico. It recently completed the acquisition of ARX Capital Management, an asset management business in Brazil.
McBains Cooper May Expand to Brazil
UK-based infrastructure, construction and property consultancy McBains Cooper intends to open offices in Brazil next year, says partner Santiago Klein, adding that the firm may seek a joint venture partner. The firm recently opened offices in Lima and Mexico City. In addition to property, it will focus on developing infrastructure projects within both the private and public sectors, with a specific view to getting long-term concessions contracts.