Petrobras avoiding bond market as selloff deepens: Brazil Credit

April 2, 2013

Boris Korby & Julia Leite – Bloomberg, 04/01/2013

Petroleo Brasileiro SA (PETR4), which sold a combined $13 billion of bonds in the first quarters of 2011 and 2012, is holding off on issuing new debt as borrowing costs rise to the highest in two years versus investment-grade peers.

Declining earnings at the state-controlled company spurred by government-imposed limits on fuel-price increases and waning offshore oil output have helped push yields on its $5.25 billion of bonds due 2021 up 0.55 percentage point this year to 4.16 percent. The jump is triple the increase for emerging-market credits rated BBB- or better, which yield an average 4.18 percent, according to data from JPMorgan Chase & Co.

The bond rout is prompting the oil producer to delay plans to raise about $12 billion in debt this year, according to Vinicius Pasquarelli, an emerging-market debt trader at Standard Credit Group LLC. Petrobras, which is developing the biggest crude discoveries this century beneath the Atlantic Ocean, faces rising borrowing costs as leverage climbs to the highest in at least a decade and concern mounts that government interference is damping profits.

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Brazil’s Government Prods Top Banks to Help Ignite Economy

February 6, 2013

Rogerio Jelmayer – Fox Business/Dow Jones Newswires, 06/02/2013

An increase in lending is seen as essential if Brazil is to jump-start economic growth. While lending has more than doubled over the past 10 years, the pace of growth fell in 2012 and has been blamed, in part, for disappointing growth in 2012.

In 2012, lending by all banks increased 16.2% to a record of nearly 2.4 trillion Brazilian reais ($1.2 trillion). But that was the lowest expansion in years. By comparison, lending rose 19% in 2011 and 21% in 2010.

Brazilian gross domestic product expanded by only 2.7% in 2011 and by an estimated 1.0% last year. The consensus forecast for 2013 is better at 3.1% but still lags behind developing-country rivals China and India.

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Brazil sweetens road concession terms to lure investment

February 5, 2013

Roberta Vilas Boas – Reuters, 02/05/2013

SAO PAULO, Feb 5 (Reuters) – Brazil extended concession periods and improved financing conditions to lure private investors into multi-billion dollar road projects, in the latest bid to bolster anemic investment in Latin America’s largest economy.

Finance Minister Guido Mantega said on Tuesday the government has sweetened conditions of road concessions to raise the rate of return for investors to more than 10 percent in real terms.

“The government is seeking to boost the profitability of these projects to make them very attractive to investors,” Mantega told a crowd of business leaders in Sao Paulo. “We are talking about a large volume of investment that will help our economy become more dynamic.”

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Brazil’s boom needs talent

June 27, 2011

Dana Mattioli – Barrons, 06/24/2011

Multinational companies are taking extra measures to secure qualified employees in Brazil’s booming economy. To cope with a talent shortage, many are beefing up internship programs, spending more on training and salaries and relocating workers from flat or declining markets.

Particularly in demand: English-speaking managers and engineers, as well as those with experience in business development.

Brazil’s economy has soared in recent years as its oil, gas and ethanol sectors thrived. In 2010, U.S. foreign direct investment in Brazil totaled $6.2 billion, up from $2.4 billion in 2003, according to the Banco Central do Brasil. From January through April this year, U.S. investment reached $3.1 billion.

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Brazil Finmin convinces Lula to adopt inflow tax

October 17, 2009

Reuters, 10/17/09

Brazil’s government plans on reviving a tax on capital inflows to contain the recent surge of the local real currency against the dollar, Folha de S. Paulo newspaper reported on Saturday, without citing sources.

President Luiz Inacio Lula da Silva denied there were plans for any such tax on Friday. But the newspaper said Finance Minister Guido Mantega convinced Lula to adopt the measure and that it could be announced already in the beginning of next week.

The idea is to slow down a sharp influx of capital into the country which is helping to rapidly strengthen the local currency, making exports expensive, the report said.

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Brazil’s real (BRBY) has gained around 37 percent this year, while the Bovespa stock index .BVSP has rallied more than 76 percent so far in 2009.

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