Category: Brazil

Meanwhile, Brazilian petrochemicals firm Braskem and Venezuelan state-owned Petroquimica de Venezuela (Pequiven), part of PDVSA, have signed an agreement to build a petrochemical plant in eastern Venezuela. The plant, located in the northeastern state of Anzoategui, 400 kilometers from Caracas, will cost between $1.5 billion and $2.5 billion to build and make operational.

Brazil’s Central Bank has cut its benchmark lending rate by three-quarters of a percentage point, from 16.50% to 15.75%, its lowest level in five years. The move to cut rates is aimed at boosting economic growth and is possible because of the stable inflationary environment. The new finance minister, Guido Mantega indicated that he wanted to see “more civilized interest rates” for the country when he took office last month.

Brazil’s state-owned oil company, Petrobras, has announced a new offshore oil discovery which it estimates will yield around 280 million barrels of oil equivalent. The light crude field was found off the coast of Espírito Santo state, 12 kilometers northwest of its Golfinho well. Brazil is working to becoming self sufficient in oil by 2006/7.

Grupo Abril, Brazil’s largest publishing and print group, has raised $12 million through a sale of bonds maturing 2008. The bonds carry a yield of 10.15%. The Group recently announced plans to float stock on the São Paulo Stock Exchange. Abril publishes seven out of 10 of the country’s most popular magazines, including Veja – one of the world’s best-selling weekly publications. Its wider media interests include a 70% stake in MTV Brasil.

Brazil bought back $6.64 billion of Brady bonds yesterday, Tuesday, drawing on $5.6 billion of its foreign currency reserves to help fund the repurchase. The buyback, which was announced in February, represents 8% of the Brazil’s foreign-currency denominated debt and will save the country $350 million in interest payments. Brazil’s Brady bonds comprise five different classes and have maturities that vary between 2009 and 2024.

Brazil’s largest fixed-line telecoms operator, Telemar, is to restructure its share capital and unite stock from its various companies into a single class. The new voting shares will then be sold via a secondary offering on the Novo Mercado of the São Paulo Stock Exchange (Bovespa). UBS and Rothschild Group are advising Telemar on the transaction. Telemar will join an expanding group of Brazilian companies seeking a listing on the Novo Mercado, a section of Bovespa that requires a higher level of transparency from listed companies. The last company to list was airplane manufacturer Embraer.

Belgian-based InBev, the world’s largest brewer, has raised its 56.7% stake to 91.2% in Argentine brewer Quinsa, the maker of Quilmes beer. InBev, through its Brazilian subsidiary AmBev, paid $1.2 billion for Quinsa, owned by the Bemberg family, reinforcing its position as the largest beer-maker in Latin America. The acquisition will be funded through debt, said the company.

Brazil’s largest airline carrier, TAM, has raised $730 million via a global sale of preferred shares in one of the largest public offerings ever in Brazil. Most of the stock was bought by US investors, followed by those in Brazil and Europe. The company first floated its stock on the São Paulo Stock Exchange last July when it listed 21.6% of its share capital. The most recent issuance takes the company’s free float to 45.3%, one of the largest on the Exchange. The remaining 54.7% of the stock is held by TAM Empreendimentos e Participações and the Amaro family. Most of the proceeds of the share sale will be used to update and expand TAM’s fleet. The sale was coordinated by Credit Suisse, Pactual Capital Corp and Merrill Lynch.

Brazil’s Central Bank has announced the names of two newly appointed board directors following the resignation of Alexandre Schwartsman, head of international affairs, and the departure of Sergio Darcy, chief of regulations, who is taking up a board position at the Bank’s pension fund. Schwartsman will be replaced by economist Paulo Vieira da Cunha, currently professor at Columbia University; Darcy’s replacement is Alexandre Tombini, who is head of special studies at the Bank and already a board member. Tombini’s post will be covered by Mario Mesquita who joins from ABN Amro where he was chief economist. The moves at the Bank are not expected to affect policy management and have been well received by the markets.

Meanwhile, Antonio Palocci, Brazil’s former finance minister who resigned last month, has been formally charged by police for violating the country’s bank secrecy laws. Palocci, considered one of the chief architects of Brazil’s economic recovery, was indicted in Brasilia on charges of illegally accessing the confidential bank records of Francenildo Santos Costa, a caretaker who contradicted the former minister’s congressional testimony. Santos Costa testified that he had seen Palocci at the house at the center of the corruption and bribery scandal that has rocked the government.