In a televised address Brazil’s President Luiz Inácio Lula da Silva apologized to the nation amid allegations of government corruption and called on his cabinet to ensure a congressional probe into the claims doesn’t stunt economic growth. Lula said that those found responsible will be “brought to justice”. Analysts said the vote-buying scandal, which erupted in June, is weakening Lula’s support and making him more vulnerable to demands by unions to boost spending on wages and businesses to cut taxes. Presidential elections are slated for 2006 and Lula may struggle to win a second term.
Category: Daily Brief
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Usiminas´ Profit Surges
Brazilian steelmaker Usiminas saw its net profit climb 53 percent year-on-year in the second quarter to $355 million as higher steel prices offset weak domestic demand. Revenue rose 26 percent to $1.45 billion. The company expects inventory levels in the US and Europe to fall and production and sales to rise to normal levels in the fourth quarter. Usiminas exports 25 percent of its products.
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Venezuela´s Rating Raised
Standard & Poor’s raised Venezuela’s long-term foreign currency debt rating one level to B+. S&P said growing international reserves from oil income lowered the risk of a default. The economy grew 7.9 percent in the first quarter and 18 percent last year as international reserves surged to $30.4 billion this month from $11 billion in January 2003. S&P´s B+ rating is four levels below investment grade.
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CORRECTION:
In Friday’s LatinFinance Daily Briefing we incorrectly reported that Mexican cellphone operator América Móvil had bought BellSouth´s mobile assets in Latin America for $5.85 billion last year. In fact, BellSouth sold to Spain’s Telefónica. We apologize for the error.
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Ambev Boosts Ebitda
Brazilian beverage giant Companhia de Bebidas das Americas (AmBev) reported Ebidta of $590 million in the second quarter, up 93 percent year-on-year. Revenue in Brazil rose 23 percent, while revenue in the rest of Latin America was up 12 percent. Operating margins in the period increased to 38 percent.
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CSN´s Net Disappoints
Companhia Siderurgica Nacional, Brazil’s third-largest steelmaker, reported net income down 1 percent to $182 million in the second quarter. Sales fell 16 percent year-on-year to 1.137 million metric tons, while domestic steel prices fell 4 percent in the quarter and export prices were down 10 percent. CSN is among Brazilian steelmakers such as Gerdau, Latin America’s biggest steelmaker, whose earning have declined as a cooling economy cuts local sales, forcing increased reliance on less-profitable exports.
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Ecuador Plans Bond Sale
Ecuador will sell bonds worth $300 million to Venezuela in September, according to the country´s Economy Minister Magdalena Barreiro. Barreiro, who took office this week, says Ecuador is seeking guarantees on the debt by the Andean Development Corporation (CAF). Venezuela, continuing President Hugo Chavez´s policy of building economic ties with other South American countries, has made a proposal to process Ecuadorian crude oil in Venezuelan refineries.
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Fox May Sign Sugar Law
Mexican President Vicente Fox may concede to sugar farmers’ demands and sign legislation that would help keep prices of the commodity from falling, Agriculture Minister Javier Usabiaga said. Thousands of sugar growers from 15 states began blocking the entrance to the agriculture ministry in Mexico City two days ago. The legislation, which Fox had previously promised to veto, would bring back a formula for setting prices mills pay for sugar.
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Márcio Guedes, Investment Banking Director – Brazil, Citigroup
to join discussions at Brazil – The Way Forward, The 3rd Brazil Investment Forum in Rio de Janeiro, 31 Aug – 1 Sep 2005. Apply for your invitation today at www.latinfinance.com/brazil
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Satmex Wins Court Order
Mexican satellite company Satelites Mexicanos (Satmex), has won a court order preventing US creditors from seizing its assets as the company reorganizes in Mexico. Satmex filed for bankruptcy protection in Mexico in June and last week asked for protection in New York under Section 304 of the US Bankruptcy Code, which bars creditors and others from interfering while a debtor reorganizes in another country. Satmex has defaulted on more than $520 million in bonds issued in the US.