Category: Brazil

Brazil’s Central Bank has intervened in the market to buy US dollars for reais for the first time since 11 August, pushing the dollar up by 0.89% to R$2.250. The Bank did not confirm the amount bought. Analysts had been expecting the Bank to intervene since the dollar hit its lowest level in nearly five years when it reached R$2.230 last Friday. The Bank confirmed it had bought in three lots and from three financial institutions: Bradesco, BNP and HSBC.

Brazilian steel producer Gerdau has placed $200 million of private short-term debt, raising the planned amount of the issue by $50 million in response to strong demand. The 12-month paper will pay an annual return of 5% and mature in October 2006. The steel producer is taking advantage of the strong investor demand for its country’s paper to refinance its debt. The issue is part of a $300 million program and is being coordinated by Banco Santander.

US firm Citigroup and three Brazilian pension funds have finally managed to wrest control of Brasil Telecom from local finance group Opportunity in a dispute that has lasted seven years. An extraordinary general meeting of shareholders last Friday saw the Banco Opportunity board members removed and replaced with representatives of the US financial group and local pension funds. Brasil Telecom is the country’s third-largest phone operator. Citigroup and the pension funds own 58% of Brasil Telecom’s shares, Telecom Italia owns 38% and Banco Opportunity 3.8%.

Brazilian steel producer Gerdau is to launch $150 million of private short-term debt to take advantage of the current investor demand for its country’s paper. The 12-month paper will yield 4.75% annually and matures in October 2006. The issue is part of a $300 million program and is being coordinated by Banco Santander. Gerdau recently launched $600 million of perpetual bonds in an issue that was heavily oversubscribed.

The second-largest US securities firm Goldman Sachs is reportedly in talks to buy a 45% stake worth around $475 million in Brazilian investment bank Banco Pactual. This would be Goldman Sachs’ first purchase in Brazil after years of advising on M&A in the country. Rio de Janeiro-based Banco Pactual is Brazil’s second-largest underwriter of equity sales.

Brazil’s Central Bank has sounded an optimistic note regarding inflation, lowering forecasts this year from 5.8% to 5%. They expect the rate of inflation to slow further next year to 3.5%. Analysts say this points to a likely further cut in the benchmark interest rate in October, following the quarter of a percentage point cut earlier this month.

Brazil’s lower house in Congress has elected Aldo Rebelo as president of the Chamber of Deputies, replacing Severino Cavalcanti who resigned on 21 September because of allegations of bribery. Rebelo, a former cabinet minister and the favored choice of President Luiz Inácio Lula da Silva, won in the second round of votes, after a tie with José Thomaz Nonô with 182 votes a piece in the first round. A total of 509 deputies of the lower house of Congress took part in the vote.

Venezuela and Brazil are planning to announce five joint energy projects to include areas such as refineries, gas and infrastructure. The plans are set to be presented later this week at a summit of South American presidents in Brasilia. State-owned PDVSA of Venezuela and Petrobras of Brazil will work jointly in the projects.