Category: Brazil

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.

Brazil is to reopen its 2015 euro-denominated bond issue with plans to sell around €300 million of the paper. A total of €500 million ($650 million) 2015 bonds were originally issued in January 2005 with a coupon of 7.375%. This is the second time this year the sovereign has tapped the international capital markets – it sold $1 billion of dollar-denominated debt on 10 January — as it takes advantage of continuing low financing.

India’s state-owned Oil and Natural Gas Corporation Ltd (ONGC) has agreed to buy the 30% stake that ExxonMobil Corp holds in a block of Brazil’s Campos Basin off the coast of Espirito Santo for $1.4 billion. The block is expected to yield 400 million barrels of oil. This is the largest foreign purchase by the Indian oil company after investing in Russia’s Sakhalin-I field.

Companhia de Bebidas Das Americas (AmBev), Brazil’s largest brewer and soft drinks company, has become the first Brazilian corporate to be rated investment grade by ratings agency Fitch Ratings following a recent debt restructuring at AmBev’s Canadian subsidiary Labatt. Fitch upgraded the company’s senior unsecured foreign currency rating to BBB- from BB+ , three notches above Brazil’s sovereign rating at BB-, and assigned a stable rating outlook to all AmBev’s ratings.

Brazil’s budget deficit broke the $7 billion mark (R$15.8 billion) in December to total $28 billion (R$63.6 billion) for the year, accounting for 3.3% of GDP in 2005 compared with 2.7% in 2004. Higher interest rates, peaking in May at 19.75%, contributed to the widening deficit by driving government borrowing higher.

The world’s largest iron-ore producer, Brazilian Cia. Vale do Rio Doce, is using some of its excess cash to buy up the remaining shares of local mineral and metals company Caemi Mineração e Metalurgia SA in a stock trade worth around 3.3 billion reais ($1.46 billion). CVRD already owns around 60% of Caemi’s capital.