Category: Brazil

Brazil’s January inflation rose 0.59%, the highest rate since October and above economists’ average forecasts of 0.55%. Year on year the rate was barely unchanged against the 0.58% recorded for the same month in 2005. Last year Brazil saw consumer prices rise 5.69%, above the targeted 5.1%; the government is this year aiming for 4.5%. The government says inflation last month was driven by the rising price of gas and gas alternatives.

Brazilian industrial output has begun to show signs of recovery, rising by 3.2% year on year in December, the highest surge in four months and double market forecasts. The increase in production may temper the Central Bank’s approach to interest rate reductions, say economists. The Bank has recently begun to look at bigger cuts to the still-high benchmark rate, currently at 17.25%. The government has revised initial output estimates for October and November to 0.4% and 1.3% year on year growth from 0.1% and 0.6%, respectively, showing better-than-expected growth. Overall in 2005, production was up 3.1%.

A hundred analysts and economists surveyed by Brazil’s central bank have forecast an average inflation rate of 4.66% for this year, compared with a previous forecast of 4.60%. Inflation last year dropped to a six-year low of 5.69%. The central bank is targeting inflation of 4.5% this year.

Petrobras, Brazil’s state-owned oil company, has forecast a trade surplus this year for the first time ever this. The projected surplus of $1.34 billion in 2006 is thanks in large part to the new P-50 oil platform in the Albacora Leste oil field in the Campos Basin, due to come on line in March. The field is expected to produce around 180,000 barrels per day (bpd) and will boost overall output to 1.91 million bpd this year, up from 1.68bpd last year, thereby exceeding domestic demand by around 60,000 bpd.

Ratings agency Standard & Poor’s has raised Venezuela’s long-term sovereign credit rating to BB- from B+, the same level as its large neighbor to the south, Brazil. Last November Venezuela received a ratings upgrade from Fitch, up to BB- from B+. Venezuela has indicated that it is looking to improve its credit rating by extending its debt profile and retiring some of its debt.

Petróleo Brasileiro (Petrobras), Brazil’s state-owned oil company, has reached a deal to buy the share of the Macae power plant from Houston-based energy distributor El Paso Corp. The deal, worth $358 million, for the loss-making gas-fired plant to the north-east of Rio de Janeiro, will end a dispute over capacity payments between Petrobras and El Paso. Proceeds from the sale will be used to repay around $225 million of project financing for the plant. Under the terms of the agreement, the parties will look to sign definitive documentation by mid-March, with the sale hopefully completed in the first half of the year.

Brazil’s Banco Industrial e Comercial (BICBanco) has become the country’s first bank to join the IFC’s Trade Finance Facilitation Program (TFFP) as an issuing bank. The program helps Brazilian companies wishing to export to developing nations, in particular within Africa, by offering guarantee coverage of bank risk in emerging markets. BICBanco, which specializes in trade finance, is the ninth-largest private bank, serving medium-sized companies.

Bolivia’s new government says it will start talks next week with neighbors Argentina and Brazil to discuss an increase in its charges of natural gas. Bolivia, which has South America’s second-largest natural gas reserves, exported around $1 billion worth of gas to its neighbors last year, accounting for nearly a third of total gas exports. Price negotiations will be carried out by state oil company YPFB.

Banco Itaú, Brazil’s second-largest private-sector bank, is to set up an insurance company with Bermuda-based XL Capital. Following two years of talks, the two companies have signed a memorandum of understanding to set up an insurance business covering the high-risk areas of trade and industry. The joint venture is awaiting approval from regulators.

Brazil sold €300 million ($365 million) of euro-denominated bonds yesterday, Monday, less than the €500 million originally mooted. The 2015 bonds, which were issued as an extension of an original €500 million offering made in January 2005, were sold to yield 5.45%. Analysts believe market fatigue may have caused the offering to be trimmed; January saw bumper issuance of emerging market paper.