Category: Brazil

Banco, do Brasil, Brazil’s largest bank in asset terms, says it is to focus on its stock underwriting business following a year which saw the bank managing no stock offerings, despite record sales in local stocks. The bank expects another bumper year in 2006, estimating stock sales will rise as much as 50% to $6.75 billion.

Brazil’s share markets and its currency continue to slide as the corruption scandal that has engulfed the government since June now looks to be centering on Antonio Palocci, the country’s Minister of Finance. Palocci has been accused of involvement in illegal campaign financing while mayor of Ribeirao Preto in São Paulo state. Palocci is to appear before a Senate committee today, Wednesday.

Banco do Brasil, Brazil’s largest bank, has announced record profits of $625 million in the third quarter of this year, up 72.6% against the same period last year. Excluding extraordinary items, however, such as a $246 million gain from tax recovery, profits were up only 4.8% to $379 million.

Meanwhile, Brazil’s consumer price rose 0.75% in October, up from 0.35% a month earlier. The markets had been expecting a rise of only 0.55%. The rise was driven by high gas prices, according to the government. Annual inflation rose to 6.34% from 6.04% in September.

Brazil’s third-largest private bank, Unibanco, also saw earnings climb 45% year on year to $218.4 million in the third quarter. The bank said increased lending had helped to push up profits, with personal loans up 33% and corporate lending up 19%. The bank’s annualized return on equity was 23.3%.

Brazil returned to the international debt market for the fourth time this year with a new issue of 10-year bonds. Yesterday it reopened its 2015 issue to price $500 million of 7.875% bonds to yield 312 basis points over 10-year US treasuries. The decision by the sovereign to offer more dollar-denominated debt came after ratings agency Standard & Poor’s improved the country’s credit outlook yesterday to positive from stable. Brazil has sold $6.9 billion of bonds in the international market so far this year. The Brazilian currency, the real, rose even higher on news of the debt offering, soaring to 2.1660 against the US dollar yesterday morning, its highest point since April 2001.

Brazilian Unibanco Leasing, an affiliate of the country’s third-largest private bank Unibanco, will issue 2 billion reales ($905 million) of non-secured long-term debt. No details of maturity or interest rates were made available.

Brazil’s largest private bank, Banco Bradesco, has announced a year-on-year profits increase of 68% in the third quarter, as net income rose to $647 million. The rise is being attributed in large part to high interest rates and a growing demand for consumer credit.

Brazilian iron-ore producer Companhia Vale do Rio Doce has approved plans to invest more than $1 billion in improving alumina and bauxite production in a joint venture with Norway’s Norsk Hydro. CVRD will spend the bulk of the money in expanding its Alunorte alumina refinery. Alumina is used to make aluminum.

Brazil’s currency, the real, closed on Friday at 2.212 to the US dollar, its highest rate in four-and-a-half years. Analysts expect the real to maintain its strength for the time being because of the high amount of dollars in the market. A further influx is expected with further bond issues in the pipeline.