December 11, 2013
Patricia Rey Mallén – International Business Times, 12/11/2013
Brazil is a constant feature in travel bucket lists around the world – and those who do realize their dream, go back home already planning to return. According to Brazil’s Tourism Ministry, 98 percent of visitors leave the country wanting to come back.
However, the numbers of tourists in Brazil are not as spectacular as one would imagine. In 2012, only 6 million foreigners visited Brazil, as opposed to 62 million in the U.S. and 23 million in Mexico. Even its small mother country Portugal, with 7.2 million visitors in 2012, got more tourists than Brazil.
The 6 million number is dwarfed by travel agent’s estimates of Brazil’s “capacity” for visitors at 40 million. The failure to attract them could be the result of bad government policies, despite the efforts of President Dilma Rousseff’s administration.
December 11, 2013
Anderson Antunes – Forbes, 12/10/2013
Three years after raising almost $70 billion in the largest share issue ever, Brazil’s state-owned oil and gas Petrobras PBR -3.72% is in the midst of an unprecedented financial crisis. As the company approaches its 60th anniversary, it has seen its market capitalization drop 45% since its peak in 2010, from $196.21 billion to the current $103.9 billion. At the same time, Petrobras’ debt soared to over 2.5 times before earnings, taxes, depreciation and amortization (EBITDA), totaling $112.4 billion as of June 30, 17% more than a year earlier. Net debt, or debt minus cash and marketable securities, was $79.6 billion, resulting in the company’s recent downgrading by Moody’s on concern that fuel subsidies and huge investment commitments will cause its debt to grow until at least 2015.
But why has Petrobras — whose CEO Maria das Graças Silva Foster is one of FORBES’ Most Powerful Women — gone from heaven to hell at the very moment when it is announcing some of its biggest oil discoveries, including those in its Libra field, whose estimates for production were recently updated to as much as 12 billion barrels, twice previous estimates?
Simply put, for Petrobras — as for any other oil company out there in the world, and Brazil’s own bankrupt OGX is an example of that — more oil means more investments and debt. Considering that Petrobras also has the world’s largest corporate spending program, valued at $237 billion, it also means more trouble.
December 11, 2013
Luciana Otoni – Reuters, 12/11/2013
Brazil will raise interest rates on some state-subsidized credit lines in 2014, Finance Minister Guido Mantega said on Wednesday, withdrawing part of the stimulus that helped boost investments but also hurt public finances this year.
Interest rates on loans for the purchase of capital goods and trucks will climb to 6 percent per year, from 4 percent, while a special credit line for exports will bear rates of 8 percent a year, up from 5.5 percent.
The subsidized credit lines are part of a special program by state development bank BNDES to lower the cost of capital goods for industries and farms.
December 11, 2013
Gerson Freitas & Marvin G. Perez, Bloomberg, 12/11/2013
Coffee farmers in Brazil, the top producer, may get funds to grow other crops and the option to sell more of their output at subsidized prices as part of aid measures the government is considering after prices plummeted.
The country’s coffee policy panel is discussing a program to offer growers as much as 1 billion reais ($430 million) of funding to diversify crops or raise cattle, the Agriculture Ministry’s coffee director, Janio Zeferino da Silva, said in an interview. The amount of coffee the government will offer to buy through option contracts may increase to 5 million bags in the next harvest from 3 million this season, he said.
“We want these growers to maintain their coffee output levels in a smaller area through productivity gains so that they can add new activities to their farm and get additional income,” Silva said in an interview late yesterday in Santos, Brazil.
December 9, 2013
Joe Leahy – Financial Times, 12/8/2013
Global investors may be growing wary of emerging markets as the US prepares to scale back its monetary largesse next year, but one fund has hit on what it hopes could be a boom industry – Brazilian fraud.
The move by New York-based hedge fund Platinum Partners to invest in the recovery of Brazilian fraud claims worth R$12bn (US$5.1bn) shows how investors are venturing deeper into the more esoteric areas of emerging markets in their quest for yield.
Under the deal, international asset chaser Martin Kenney, a Canadian lawyer whose previous cases include representing the liquidators of the assets of renowned Texan fraudster Allen Stanford, has assembled a portfolio of 10 cases in which Platinum Partners will invest.
December 9, 2013
Raymond Colitt – Bloomberg, 12/09/2013
Economists covering Brazil reduced their 2013 inflation (BZPIIPCY) forecast for the fourth straight week after weaker than expected growth in the third quarter, a central bank survey showed.
Consumer prices will increase 5.7 percent this year, according to the median forecast in a central bank survey of economists, less than the 5.81 percent a week earlier. Inflation last year was 5.84 percent and will quicken to 5.92 percent in 2014, the survey shows.
Analysts also cut their forecast for economic growth this year to 2.35 percent from 2.5 percent a week earlier. That compares with 1 percent growth last year. Latin America’s largest economy will expand 2.1 percent in 2014, according to todya’s survey. Brazilians will elect their next president in October.
December 5, 2013
Adam Green – Financial Times, 12/05/2013
The BNDES, Brazil’s government-owned development bank, will open its first Africa office on Friday in South Africa’s commercial capital of Johannesburg. Only the third overseas office for the Banco Nacional de Desenvolvimento Econômico e Social after Montevideo and London, it signals the ever-growing ties between Latin America’s largest economy and the world’s fastest growing continent. Its goal is simple – to push Brazilian companies deeper into Africa.
“We feel we are latecomers. We should have been in Africa for some time but now we are ready,” says Sergio Foldes, managing director of the bank’s international division. “By being close to institutions and decision makers, by being able to cover the region better, we can take better decisions.”
The move caps a decade-long strengthening of commercial and diplomatic relations. From 2000 to 2012, trade between Brazil and Africa grew from $4.9bn to $26.5bn. Africa’s share of Brazil’s international trade has doubled from 3 per cent in the 1990s to about 6 per cent today. In the diplomatic sphere, Brazil now has 37 embassies in Africa, up from 17 in 2002. And the love is reciprocated, it seems. Since 2003, 17 African embassies have opened in Brasília, adding to the 16 already there, making the Brazilian capital home to the largest concentration of African embassies in the southern hemisphere.
December 5, 2013
Matthew Malinowski & Raymond Colitt – Bloomberg, 12/05/2013
Brazil’s central bank said its current pace of interest rate increases remains appropriate to rein in consumer prices, repeating language it used to justify previous half-percentage-point increases. Swap rates rose.
Policy makers, led by President Alexandre Tombini, voted unanimously on Nov. 27 to raise the benchmark Selic rate to 10 percent from 9.5 percent, marking the fifth straight 50 basis-point increase. Monetary policy must remain especially vigilant, officials said in the minutes to their Nov. 26-27 meeting released on the bank’s website.
The central bank has raised borrowing costs by 275 basis points since April as the real dropped the most among major currencies in the past six months and deteriorating fiscal accounts sparked investor concern over a credit downgrade. Indonesia and Pakistan are the only other major economies tracked by Bloomberg that have boosted rates this year.
December 5, 2013
Financial Times, 12/04/2013
On Friday the eyes of the world will turn to Brazil for the draw of next year’s football World Cup finals. Officials had long hoped the tournament could mark Brazil’s coming of age as a global economic superpower. Yet, as they wrestle with an economic slowdown even the traditionally cheerful Brazilians are struggling to keep up their optimism.
For much of the past decade, Brazil has sprinted like one of its outstanding footballers. In 2010, growth jumped to 7.5 per cent, thanks to China’s insatiable appetite for its commodities and credit-driven domestic consumption. The turning of the commodity cycle exposed the limits of this economic model. In the three months to September, output fell by the largest margin since early 2009. This year the economy is expected to expand by a disappointing 2 per cent.
The trouble with the Brazilian economy lies in its chronic lack of infrastructure. At 19 per cent of national income, investment is well below the typical level for an emerging market. Since domestic savings are low, Brazil must rely on external capital to finance the roads and bridges it needs. But foreign investors have become increasingly wary of Brazil because of its high taxes and excessive red tape.
December 4, 2013
Gerson Freitas & Jeff Wilson, Bloomberg, 12/04/2013
The crash in corn prices is spilling over into soybeans. As a result, Brazil will grow more of the higher-value oilseed, helping push global markets into a record glut and replacing the U.S. as the top producer.
Soybean farmers in the largest exporting nation plan to sow a second crop in a Jamaica-sized area in the off-season rather than rotate to corn, as they traditionally do, after corn lost 42 percent in a year. That’s enough to produce a record surplus of the legume used in everything from tofu to salad dressing and sold in Japanese restaurants as edamame beans.
A group of farming companies including Vanguarda Agro SA (VAGR3) are planning to make the switch for the May-to-June harvest for the first time rather than lose more money in the off-season on corn. Vanguarda’s third-quarter loss was its biggest in a year.