Category: Brazil

Brazilian bank lending rose 1.6% in March, the fourteenth straight monthly increase, to $201 billion after rising 1.4% in both February and January. Lending has risen 30% since September 2003 when President Inácio Lula da Silva began a program of payroll loans to make borrowing more affordable by reducing the risk of defaults. The program allows workers to borrow at lower costs because repayments are deducted directly from their wages.

Brazil’s low-cost carrier Gol and its shareholder AIG Capital Partners, have raised $204.7 million with the sale of new and existing shares in the airline. Gol and an affiliate of AIG Capital, sold 14.7 million non-voting preferred shares. Gol sold 5.5 million new shares and AIG’s affiliate BSSF sold 9.2 million shares it held in the carrier. Gol, now Brazil’s third airline, went public last year in a New York and São Paulo IPO.

Banco Bradesco, Brazil’s biggest private sector bank, will sell $1.6 billion worth of 20-year bonds on the domestic market and scale back borrowing overseas. The bank will cut by more than half the $2 billion of bonds it planned to sell on international markets this year. Brazilian companies have boosted domestic bond sales as the fastest economic growth in a decade helps drive demand for local-currency debt. Bradesco’s leasing arm will issue the debt, and use the proceeds to meet increased demand for financing.

Brazil posted a March balance of payments surplus of $3.6 billion, even after making its first payment of the year to the IMF of $1.17 billion. The current account was $1.76 billion in surplus. The current account surplus hit a new record of $12.71 billion in the twelve months through March, equivalent to 2.05% of GDP. Profit and dividend remittances were $661 million, down from February’s $1.35 billion. The capital and financial accounts posted a $1.56 billion surplus. Total private sector debt amortizations were $800 million. FDI flows were $1.4 billion. Gross international reserves climbed to $61.96 billion, or about $38 billion in net terms.

Brazilian economists increased their 2005 inflation forecast for an eighth straight week on concern rising international oil prices will force the government to raise domestic fuel prices, a Central Bank survey showed. The median expected inflation rate rose to 6.15% from 6.1% a week earlier and from 5.68% at the end of February. The estimate is the highest since the Central Bank started polling the market’s inflation forecasts four years ago.

Brazil’s Embraer, the world’s fourth-biggest aircraft maker, won a $400 million order for 15 aircraft from Saudi Arabian Airlines, the first Middle-Eastern carrier to buy the company’s new, bigger jets. The state-run airline ordered 15 Embraer 170 aircraft with delivery due to begin in December. Embraer is trying to secure orders from Europe and other parts of the world to offset the growing risk that some of the company’s cash-strapped US customers may continue to cancel orders.

Deposed Ecuadorian President Lucio Gutiérrez has arrived in Brasília, where he is expected to petition Brazil’s Justice Ministry for political asylum. Ecuador’s new government — led by former Vice-President Alfredo Palacio — originally issued an arrest warrant for the ex-president following widespread protests. The opposition denounced him as corrupt and for firing Ecuador’s Supreme Court justices.

Former Ecuadorian President Lucio Gutierrez, speaking from the Brazilian embassy in Quito, has complained that his removal from office was unconstitutional. Congress stripped Gutierrez of power last week after massive protests erupted in Quito against alleged corruption in his administration and his recent firing of the Supreme Court. Ecuador’s new government, led by former Vice-President Alfredo Palacio, has granted Gutierrez permission to leave the country.

Brazil’s central bank unexpectedly raised its benchmark lending rate for an eighth straight month in a bid to rein in inflation. Central bankers voted unanimously to lift the overnight interbank rate 25 basis points to 19.5 percent. Retail sales rose at their slowest pace in 15 months in February and industrial output grew at its weakest pace in four, evidence the expansion in South America’s biggest economy is decelerating. But consumer prices rose 7.5 percent in the 12 months through March, above the central bank’s 5.1 percent year-end target.

Net profit at Brazil’s third largest network Brasil Telecom fell 38% in the first quarter to $17.6 million, although sales rose 18% to $957 million. The company has extended discounts of as much as 50% on wireless calling plans to compete with rivals Vivo, Telecom Italia Mobile and America Movil, which control most of the Brazilian market.