Category: Brazil

Brazil’s economy has slowed for the first time in two years, contracting 1.2% in the third quarter compared with the second. Year on year, GDP grew by 1% in the third quarter compared with 4% y-o-y growth in the second quarter. Analysts think the slowing economic expansion may prompt larger interest rate cuts by the central bank. Brazil’s benchmark interest rate has been cut three times since September but remains at a high 18.5%.

Brazilian Unibanco Leasing has offered indexed notes maturing in 2020 worth $913 million (R2 billion). The long-term unsecured debt will pay an annual rate linked to the local interbank lending rate. The deal is being coordinated by Unibanco, Brazil’s third-largest private banking group.

Brazil sold $500 million of its 2034 global bonds yesterday, Tuesday, to take advantage of record prices. The bonds will yield 8.311%. The sovereign last issued the bonds in May 2004 to yield 8.81% when it sold $500 million. It had originally offered $1.5 billion of the 30-year bond in January 2004 at 8.75%. The sale was managed by Merrill Lynch & Co and Barclays.

Brazil’s Companhia Vale do Rio Doce (CVRD), the world’s largest iron-ore producer, has paid $749 million in cash for a 93% stake in nickel company Canico. CVRD originally made an offer to buy the Canadian company in September at C$17.50 but later increased its offer to C$20.80 after the bid was rejected by Canico’s board.

Brazil’s Central Bank says it sold all the reverse dollar currency swap contracts it offered to the market yesterday, Monday. The Bank sold 10,500 contracts worth just over $500 million. The contracts, which are linked to local interest rates allow investors to access Brazil’s high rates without having to buy local currency.

Low-cost Brazilian airline BRA says it plans to expand its domestic operations by going public. It foresees investment of up to $5.5 million to increase its fleet up to 17 by the end of next year. The company began operations earlier this month and targets low-income clients.

Brazil is to offer 10,500 currency swap contracts today, Monday, worth up to $500 million. The swap will include five bonds with maturities ranging from March 2006 to January 2008. Earlier this month Brazil offered investors the opportunity to swap dollar-indexed debt instruments for currency swap contracts linked to local interest rates, thereby allowing them access to Brazil’s high rates without having to buy local currency.

Brazil’s external debt at end October fell by 9.8% to $181.6 billion from $201.4 billion at end-2004. The majority of the debt — $165 billion — is medium to long term. Of the total, 55% is accounted for by non-financial public sector debt with the balance belonging to private enterprise and state-owned financial institutions.

Brazil has cut its benchmark lending rate to 18.5% from 19.0%, the third reduction since September. The cut is aimed at bolstering economic growth following a drop in year-on-year industrial production to 0.2% in September.

Bolivian presidential candidate Evo Morales has called on state-owned Brazilian oil company Petrobras to hand back two refineries it controls in Bolivia. Petrobras bought the refineries — in Cochabamba and Santa Cruz – from state-owned Yacimientos Petrolíferos Fiscales Boliviano in 1999 for $100 million. Morales, a left-wing cocalero leader, is currently the favorite to win the upcoming elections on 18 December.