Category: Brazil

Brazil’s Treasury Secretary Joaquim Levy announced that the government wants foreign investors to buy more of the country’s sovereign debt. Foreign participation in the domestic debt market could “quickly” be increased to at least 10 percent through planned cuts in bureaucracy and easing of requirements for foreign purchases, Levy said. Brazil is seeking to broaden demand for its $353 billion domestic debt, which is about four times as large as its dollar debt, and sell bonds with longer maturities.

Brazil’s state-owned oil company Petrobras reported net income of $2.0 billion for the first quarter, up 32 percent year-on-year. The company raised fuel prices and boosted output in the quarter to record levels. This is Petrobras’ fourth straight quarterly gain.

Brazil’s third-biggest private bank Unibanco posted a net profit of $163 million for the first quarter, up from $112 million a year earlier. The bank registered a credit portfolio of $13.5 billion at the end of March, up 22 percent year-on-year. Deposits were $14.2 billion, up 28 percent.

Latin America issuers were very busy this week. Brazil and Uruguay hit the global market and Chilean copper producer Codelco borrowed $210.5 million-equivalent with a local currency bond. Last week, Argentina raised over $300 million with a domestic market bond. What’s going on? Emerging markets and Latin America in particular were meant to suffer a hammering after S&P downgraded GM and Ford to junk status.

The market begs to differ. Latin American bonds – even Ecuador – are trading above America’s carmakers. Indeed, the chance of big issuer like Brazil winning an upgrade looks pretty good while the likelihood of GM or Ford pulling itself off the junk heap don’t look too good.

But don’t get too excited. Debt-addicted Latin America has a long history of punishing optimism. The debt crises of tomorrow are born in the bull markets of today – just remember what people used to say about Argentina ten years ago.

Brazil’s annual inflation rate rose to 8.07 percent in April, its first time above 8 percent in 16 months as medicine costs jumped and a drought in the south of the country drove up grain prices. The monthly inflation rate surged to 0.87 percent in April from 0.61 percent in March. Brazil’s central bank has lifted the benchmark lending rate eight times since September to 19.5 percent.

Brazil sold $500 million of bonds Tuesday priced to yield 8.83 percent, 4.58 percentage points more than US Treasuries of similar maturity. The bonds mature in 2019. Emerging-market bonds have rebounded from their slide in late March as concern has eased that higher rates in the US will crimp demand for debt from emerging markets. Including Tuesday’s sale, Brazil has raised $4.9 billion of the $6 billion it plans to sell in international bond markets this year.

Brazilian no frills airline Gol posted first quarter profits of $45 million, an increase of 64 percent over the same period last year. Net revenues for passenger transport were $231 million, up 36 percent, while cargo revenues increased 32 percent to $10 million.

Brazilian holding company Itausa reported net profits of $531 million for the first quarter, up 37 percent year-on-year. The holding’s result takes into account the performance of its controlled companies Duratex, Itautec, Elekeiroz, and Banco Itau.

Brazilian President Luiz Inacio Lula da Silva opened an Arab-Latin American summit in Brasilia Tuesday which aims to boost trade between the two regions and to reduce developing nations’ economic dependence on the US and European Union. The summit marks Lula’s latest push to lead a bloc of developing countries that can press industrial nations to cut farm subsidies and lower barriers to agricultural imports.

Net income at Banco Bradesco, Brazil’s biggest private-sector bank, doubled in the first quarter to $490 million on higher revenue from lending. This marks the bank’s tenth straight quarter of rising profit. Bradesco boosted loans outstanding to $28.8 billion, a 22% increase from the first quarter last year and 6% jump since the end of December.