Yearly Archives: 2008

BTG, the Brazil boutique set up by ex-UBS fixed income head Andre Esteves, has hired Christian Deseglise as partner in charge of business development. He will be responsible for product development, investor relations and marketing activities, based in New York. Deseglise joins from HSBC Global Asset Management, where he was global head of EM.

Spain’s Telefonica is the best-prepared and likeliest buyer of telecom assets in Brazil in the medium term, according to analysts at JPMorgan. Speaking on a call last week, analysts note that among the three European telecoms operating in the country – Telecom Italia (TI), Portugal Telecom (PT), and Telefonica – the Spanish operator has the strongest balance sheet position to support acquisitions. TI and PT are both under pressure back at home, and may be tempted to sell their holdings if their liquidity issues persist, say analysts Jonathan Dann, who covers European Telecoms, and Andre Baggio, who covers Brazilian carriers. “More than 100% of the cash [PT and TI] produce will go towards refinancing [debt,]” says Dann, adding both are at the mercy of the bond market. TI has a mobile unit in Brazil called TIM Brasil, while PT shares ownership of mobile operator Vivo with Telefonica. Telefonica, which owns 80% of Telesp’s shares, may also consider using the stock to acquire TIM or the portion in Vivo it doesn’t already own. But neither TI nor PT appear willing to part with the assets quite yet, say the analysts. An analyst at a Brazilian shop who declined to be named agrees Telefonica is well positioned, and notes America Movil is the region’s other well-capitalized and deal-hungry player. But he doesn’t see either aggressively chasing deals in the coming several months. “They’ll likely let their competitors weaken even more before trying to acquire them. Now is not the time to buy,” he concludes. With regards to non-mobile assets, both America Movil face regulatory impediments when it comes to acquiring cable assets in Brazil, thanks to laws that prevent foreign ownership of assets. Telemar, which is in the process of acquiring Brasil Telecom for some BRL16bn, makes up LatAm’s third major player, notes the analyst.

Subsidiaries of state-controlled Eletrobras won 5 of the 7 packages of transmission lines to connect the Rio Madeira hydroelectric projects to the national electricity grid in a BRL724.6m auction last Wednesday. The results suggest that the government will ramp up investment in the sector and act as a guarantor for private investment to avert a slowdown as demand for power is poised to drop in 2009, says a Brazil infrastructure industry executive. State-controlled Energy Research recently cut its 2009 growth estimate for domestic consumption to 4.8% from 5.2%. The Norte Brasil consortium, led by state companies Eletronorte and Eletrosul, and Andrade Gutierrez, bid a total BRL363.4m to operate 3 of the transmission line projects. Madeira Transmissao, led by Cteep and state-owned Furnas, will pay BRL328.3m for 2 packages, while Cymi Holding won the remaining 2 for BRL50.9m. The auction, which Aneel director Jerson Kelman calls a success, was delayed repeatedly in recent weeks as the global credit crisis limited funding options for bidders. Private interest in the auction ensured its success, according to Kelman, who plays down the fact that some Eletrobras subsidiaries were part of the winning consortia. Projects were awarded at an average 7.1% discount to the government’s maximum price – among the lowest since electricity projects were offered through auctions. The 2,375km of transmission lines will link the Jirau and Santo Antonio dams in the Amazon to the city of Araraquara in southeast Brazil. The required investment to put the lines in operation nears BRL7bn, and consortia will be eligible for BNDES funding.

Independencia has agreed to receive a capital increase of up to BRL450m from the equity investment arm of development bank BNDES. The Brazilian meatpacker did not specify the size of the minority stake that BNDESPar would hold up on completion, adding that further details will be available at a later date. Independencia plans to use the funds to strengthen its capital structure and for future growth. BNDES this year has raised its stake in fellow beef producer JBS to 31%. Independencia sold $300m in 2015 9.875% bonds in May via Santander, which are now trading around 40.

Brazilian state-run energy giant Petrobras has received a BRL2bn loan to ease cash-flow troubles, local newspapers reported last week. According to O Estado de Sao Paulo, Petrobras got a BRL2.0bn loan from state-run Caixa Economica to cover short-term cash flow problems, local press reports said. Funds were apparently needed because tax payments at the end of October caused a temporary cash crisis, local press says.