Brazil’s Campos targets taxes, Petrobras to boost economy

April 17, 2014

Brian Winter & Jeferson Ribeiro – Reuters, 4/17/2014

Eduardo Campos, the centrist former state governor running third in Brazil‘s presidential race, plans to lower the tax burden and set a formula to automatically raise fuel prices at state-run oil company Petrobras if he wins the October election.

In a wide-ranging interview, Campos defended those and other reforms championed by Brazil’s business community, which has largely soured on left-leaning President Dilma Rousseff after three-plus years of slow economic growth.

Recent polls show Rousseff with a clear lead as she seeks a second term. She has around 40 percent support thanks to strong backing from poorer Brazilians who are happy with government welfare programs and unemployment still at record lows.

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Brazil’s Rousseff looks weak, but so do her election rivals

April 16, 2014

Brian Winter – Reuters, 4/16/2014

With Brazil’s economy struggling, a scandal at its state-run oil company and nearly three-quarters of voters saying they want change from their government, President Dilma Rousseff looks vulnerable in her bid for re-election this October.

But for her to lose, somebody else has to win. And her two main rivals have big, potentially fatal flaws of their own.

Senator Aecio Neves and former governor Eduardo Campos, who are both running on centrist, pro-business platforms, have failed to make significant headway in polls and still badly trail the left-leaning Rousseff despite her recent struggles.

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Brazil’s star, Petrbras, is hobbled by scandal and stagnation

April 16, 2014

Simon Romero & Landon Thomas Jr – The New York Times, 4/15/2014

No company has embodied Brazil’s rise like the oil giant Petrobras.

Bolstered by some of this century’s largest oil discoveries, Petrobras soared into the top ranks of global energy producers. Executives at the state-controlled company boasted that it could even outstrip Apple as the world’s most valuable publicly traded company. Political leaders here said Brazil was on the cusp of energy independence.

Now Petrobras is coming to symbolize something else entirely: the disarray afflicting Brazil’s sluggish economy and the reassessment of growth prospects in emerging markets around the world.

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Two heads are worse than one

April 4, 2014

The Economist, 4/5/2014

“UNIQUE.” That is how Credit Suisse, a bank, sums up Petrobras. It has a point. Most companies’ stocks would sag on the sort of news Brazil’s oil giant has faced in the past three weeks. A federal investigation was opened, into alleged backhanders paid to its employees by a Dutch company in exchange for oil-platform and drilling contracts. (Both companies deny the allegations.) A parliamentary inquiry is imminent, into the purchase in 2006 of a refinery in Texas which cost $1.2 billion but is now worth no more than $180m. A former director has been arrested in a money-laundering probe. If that were not enough, on March 24th Standard & Poor’s, a ratings agency, downgraded its corporate debt. Yet Petrobras’s shares have risen by 30%.

The reason for this seemingly irrational exuberance is that investors consider Petrobras’s prospects to be inversely linked to those of Brazil’s government, led by the president, Dilma Rousseff. The rally began with rumours (later proved premature) that Ms Rousseff’s poll lead over her likeliest challengers in a presidential election this October was dwindling. The government owns a majority stake in the company and makes most of the strategic decisions over the head of Maria das Graças Foster, the chief executive.

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Underdog for Brazil’s presidency bets on post-World Cup surge

April 3, 2014

Anthony Boadle – Reuters, 4/3/2014

Aecio Neves is running for president of Brazil and promising to turn the page on 12 years of leftist government. But he has a problem.

Despite being the grandson of a famous politician and the leader of Brazil’s main opposition party, seven out of 10 Brazilians have never heard of him.

Unfazed, he says that will change after Brazil finishes hosting the soccer World Cup in July and the presidential race kicks off in earnest in the Brazilian media.

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Brazil’s cut a break as Petrobras avoids downgrade

March 27, 2014

Kenneth Rapoza – Forbes, 3/26/2014

For once, Petrobras is the source of good news.

Sort of.

After a week of credit rating downgrades at dozens of Brazilian banks, not to mention a sovereign credit downgrade for Brazil’s foreign debt by Standard & Poor’s on Tuesday, the beleaguered oil major got its AAA credit reaffirmed by Fitch on Wednesday.

The rating affects Petrobras’ roughly $48 billion in debt, including debt owed by its financial subsidiaries Petrobras International Finance and Petrobras Global Finance.  The foreign currency credit rating on both firms was maintained at BBB with a stable outlook.

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Opposition candidates criticize Brazil’s Rousseff

March 26, 2014

Matthew Cowley & Rogerio Jelmayer – The Wall Street Journal, 2/25/2014

Opposition candidates in this year’s presidential race in Brazil on Tuesday sharply criticized President Dilma Rousseff’s management of two of the cornerstones of her 2010 victory: the economy and the government-run oil company.

The two main opposition politicians attacked the government Standard & Poor’s Monday downgrade of the country’s sovereign credit rating, and backed congressional calls for an investigation into a series of scandals at the oil firm, Petróleo Brasileiro SA,

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Brazil’s finance ministry takes issue with S&P downgrade

March 25, 2014

Brazil-U.S. Business Council, 3/25/2014

The Brazilian Finance Ministry, in a statement, was highly critical of Monday’s decision by international credit rating agency Standard & Poor’s to downgrade Brazil’s sovereign rating by one notch to BBB- from BBB. The statement said the downgrade was “inconsistent with Brazilian economic conditions.” S&P said risks to Brazilian debt have grown due to factors such as persistent inflation and deteriorating public accounts. The Finance Ministry said Brazilian accounts were “in order” and noted that Brazil’s government has consistently met primary budget surplus targets over the past decade. The Ministry also argued that Brazil has produced a consistent pattern of economic growth despite unfavorable global conditions in the past five years. The Ministry added, “Brazil is committed to investment as a priority,” noting the development of a sweeping infrastructure concessions program in recent years. Finally, the Ministry noted Brazil’s $378 billion in foreign reserves as a backstop against any international credit risk. Brazil’s credit rating is now at the minimum level for maintenance of “investment grade.” The downgrade will likely result in higher service costs for Brazilian private and public debt. S&P on Monday also downgraded Petrobras and Eletrobras by one notch to BBB-.

Read here. 

Brazil’s president faces revolt by coalition allies

March 13, 2014

Anthony Boadle – Reuters, 3/12/2014

The rift between President Dilma Rousseff and her main political allies widened on Wednesday one day after they voted in Congress to look into bribery allegations leveled at Brazil’s state-run oil company Petrobras.

Disgruntled congressmen from coalition parties summoned an array of Rousseff’s cabinet members to appear before various congressional committees in a new display of discontent.

They also invited Maria das Graças Foster, the chief executive officer of state-controlled oil producer Petróleo Brasileiro SA, to answer questions about the allegations that a Dutch company paid bribes to company officials to win contracts for floating oil platforms.

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Brazil police to probe Petrobras bribery allegations

March 13, 2014

Reuters, 3/13/2014

Brazil‘s federal police will investigate allegations that officials from state-run oil company Petroleo Brasiliero SA accepted bribes from Dutch ship leaser SBM Offshore NV, newspaper Folha de S.Paulo reported on Thursday.

Petrobras, as the company is known, last month began an internal investigation of the matter after an unidentified former employee at SBM Offshore alleged that Petrobras officials were paid $139 million in bribes through an intermediary over contracts for floating oil platforms.

A press officer at the federal police in Brasilia declined to comment on the Folha report, which comes two days after Brazil’s lower house of Congress voted to set up a special committee to monitor the Petrobras investigation.

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