Category: Brazil

Banco Itaú, Brazil’s biggest bank by market value, said first-quarter profit rose 30% to $455 million. Net assets totaled $5.8 billion at the end of the quarter, up 17% year-on-year. In a separate filing, Itaú said it planned to buy back up to 4.13 million shares over the next year, including up to 679,000 ordinary shares and 3.45 million preferred, or non-voting shares. The company currently has 61.35 million outstanding ordinary and preferred shares.

Brazil posted its biggest traded surplus ever last month after imports suffered their biggest decline in a year. Aggressive Central Bank’s aggressive monetary policy slowed demand, driving imports down 10% from the previous month to $5.33 billion. Exports dropped 1% to $9.21 billion, pushing the trade surplus to $3.88 billion. Last month, the country posted a $3.35 billion surplus. The Central Bank has increased its benchmark lending rate 350 basis points since September, and the real has increased 46% in value against the dollar since February 2003.

TeleNorteLeste Participações , Brazil’s largest phone company, said first-quarter profit fell 12% to $76 million as operations costs and taxes rose. Financial expenses rose 14% in the quarter to $253 million, while taxes and social-security contributions almost tripled to $77 million. Locally-owned Telemar has about $4.8 billion in debt, more than two-thirds of which is denominated in reais.

Brazilian mobile carrier Telesp Celular has begun offering R$1 billion ($411.5 million) in ten-year floating rate bonds in two separate tranches. The bonds will yield 3.3%-4.2% over the 252-day interbank rate. Banco Itaú is coordinating the sale with ABN Amro Real, Santander, Citibank, HSBC, BB Banco de Investimento and Pactual will as co-managers. The offering was rated ‘brAA-‘ by Standard & Poor’s.

Brazil’s Companhia Vale do Rio Doce, the world’s largest iron-ore producer, and two Korean steelmakers announced they will invest $2.75 billion to build two blast furnaces in Brazil to meet rising demand for steel spurred by China’s economic boom. Posco, the world’s fifth-largest steelmaker, agreed with Vale to build a $2 billion, 4.5 million-metric ton a year mill in Maranhão state. Dongkuk Steel, Korea’s third-largest steelmaker, plans to join Vale and Italian steel-mill equipment maker Danieli to build a $750 million, 1.5 million-metric-ton a year mill in Ceará state.

Gol, Brazil’s third-largest airline, and AIG Capital raised $205 million in a sale of 14.7 million new and existing Gol shares. Gol is increasing its fleet to add new domestic and international routes. The carrier boosted its order with Boeing by four aircraft last month as economic growth in Brazil spurred demand for air travel and the airline took market share from competitors.

Senior officials at the Brazilian Finance Ministry and Central Bank have quit unexpectedly. Marcos Lisboa, undersecretary for economic policy at the Finance Ministry has left and will be replaced by Bernard Appy, a close aide of Finance Minister Antonio Palocci. At the Central Bank, Eduardo Loyo resigned from the Central Bank where he was director of special studies and a voting member of the monetary policy council, to join the International Monetary Fund as Brazil’s representative. Neither change is expected to have a significant impact on government or Central Bank policy.

Brazil’s primary budget surplus, which excludes interest payments, rose to a record R$12.26 billion ($4.9 billion) in March on strong tax revenues and government controls on social security spending. The surplus was 19% up on the same period last year.