Category: Brazil

Peru awarded an $809 million contract to Brazilian companies Norberto Odebrecht and Andrade Gutierrez to build a highway connecting the Peru’s Pacific coast to the Atlantic. The Inter-Oceanic highway will link existing roads in Peru’s southern Andes to the jungle town of Inapari on the Brazilian border and from there will wind through the cities of Rio Branco, Porto Velho, Cuiba, and Santos. The project will be financed by the Andean Development Corporation and Brazilian export promotion agency Proex.

Brazil’s lower house of congress was suspended Wednesday after a scuffle broke out on house floor. The fighting began after former chief of staff Jose Dirceu, who re-took his seat in congress after resigning last week, defended President Luiz Inacio Lula da Silva’s government and denied allegations of corruption in the president’s own Workers’ Party. Lawmakers started shoving each other after Congressman Jair Bolsonaro, of the governing coalition’s Popular Party, walked across the floor of congress holding a bag of garbage marked “Lula” above his head.

Brazil’s Finance Minister Antonio Palocci resisted pressure from lawmakers and rejected a plan to refinance and extend repayment terms on as much as $7.2 billion of domestic farm debts. Farmers owe state-banks $5 billion and private sellers of equipment and fertilizer another $2.2 billion.

Brazil sold $600 million of bonds due in 2015, completing its financing plan for the year. The bonds were priced to yield 7.732 percent, 363 basis points more than comparable US Treasuries. Citigroup and HSBC managed the offering. The bonds are rated B1 by Moody’s and BB- by Standard & Poor’s, four and three levels below investment grade, respectively.

Brazil’s Labor Party plans to leave the ruling coalition amid allegations by Roberto Jefferson, the party’s president, that President Luiz Inacio Lula da Silva’s Workers’ Party bribed lawmakers. Labor Party members will be free to vote for or against legislation proposed by Lula’s ruling coalition, a party spokesman said. The withdrawal of the Labor Party, with its 48 seats, leaves Lula with a much narrower majority in Brazil’s lower house. Lula’s coalition is in the minority in the Senate.

Brazil’s Central Bank decided to not to raise interest rate at its regular policy held Wednesday. Slowing demand has cut inflation, allowing the Bank to keep rates at 19.75 percent. The annual inflation rate fell to 8.05 percent in May, still far from the year-end inflation target of 5.1%. Independent economists forecast a year-end rate of 6.21 percent.

TAM, Brazil’s second-biggest airline, raised $156 million through an equity offering in Brazil and the US to finance expansion of its fleet. TAM plans to buy more planes as the economy grows and competitors Varig and Vasp cut service to avert bankruptcy. TAM will use most of the proceeds from the share sale to lease or buy 20 Airbus A320s.

Brazil’s retail sales slowed for the third month in four in April, fueling speculation that the Central Bank will hold interest rates steady at a meeting today. Interest rates are at an 18-month high. Retail, supermarket and grocery store sales rose 3.4 percent year-on-year in April, compared with an 8.6 percent increase in March. Annual retail sales for the 12 months through April slowed to 8.2 percent from 8.8 percent in March.

Economists have lowered their expectations for Brazil’s GDP growth this year from 3.27 to 3.12 percent, according to a central bank survey. Brazil’s economy grew only 0.3% in the first quarter compared with the previous quarter, and rose at a weaker-than-expected annual rate of 2.9 percent. The central bank has raised its benchmark interest rate continuously over the last nine months in an effort to rein in inflation. For 2006, GDP growth forecasts remain at 3.50 percent.

JC Penney, the second-biggest US department-store chain, plans to sell Brazilian retailer Lojas Renner for as much as $255 million as it focuses on the US market. The company will put on sale its 98 percent stake in Lojas Renner next month at a price between $15 and $17.50 a share. Since August JC Penney has been using proceeds from asset sales to open new Renner stores and upgrade existing ones.