DEALTALK – Banks pin hopes for Brazil IPO revival on Levy’s success

February 4, 2015

Guillermo Parra-Bernal – Reuters, 02/04/2015

Any revival in initial public offerings in Brazil seems to hinge on whether new Finance Minister Joaquim Levy can clean up public finances and get the country’s economy back on track.

Strengthening the market for new listings depends increasingly on how much leeway President Dilma Rousseff will give the University of Chicago-trained economist to cut Brazil’s record budget gap and reverse the interventionist policies that marred her first term.

Stung by dozens of deals that failed to deliver the promised returns in recent years, money managers have become cautious about Brazilian offerings. In 2014, only one company went public on the São Paulo Stock Exchange, the worst performance for domestic IPOs in 11 years.

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Investors fear loss of millions in Brazilian property scheme

January 30, 2015

Joe Leahy – Financial Times, 1/30/2015

Nerys Pearce’s life changed forever when an illegally parked car backed out in front of her motorbike in London in 2008. The accident left the aspiring physiotherapist and triathlete, who planned to serve full-time in the British Army, paralysed from the chest down and unable to work.

After a five-year court battle, the Ascot, Berkshire, resident received a net settlement of nearly £1.2m. But her bad luck was far from over — she invested a large chunk of the money in EcoHouse Developments, a company controlled by former high-flying entrepreneur, Anthony Armstrong Emery.

A UK-based company that attracted investors from Britain, Singapore and other countries to its housing projects for the poor in Brazil, EcoHouse collapsed suddenly late last year and is now being probed by police in the UK and Brazil.

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Investors Cheer Brazil’s Next Economic Czar

November 26, 2014

Luciana Magalhaes, Rogerio Jelmayer, and John Lyons – The Wall Street Journal, 11/25/2014

Brazilian President Dilma Rousseff is set to name Joaquim Levy, a former treasury secretary and prominent banker, as the country’s next finance minister, a move aimed at bolstering Brazil’s credibility amid slowing growth, rising inflation and falling markets, an official said.

Ms. Rousseff will name Mr. Levy as Thursday, possibly with other appointments for her second term that starts in January, the official said. Mr. Levy couldn’t be reached for comment.

The 53-year-old economist will succeed Finance Minister Guido Mantega to assume the top economic post at a crucial time for a resource-rich country hitting a downturn amid declining commodity prices. Brazil is mired in a toxic mix of near-zero growth and rising inflation, and its currency has lost more than a third of its value during Ms. Rousseff’s first term.

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Analysis – Brazil’s new economy chief will need space from Rousseff

November 25, 2014

Brian Winter – Reuters, 11/25/2014

When Brazilian President Dilma Rousseff first considered replacing Finance Minister Guido Mantega two years ago, a top aide confided that any good candidate for the job would have to meet two requirements.

First, a good personal relationship with Rousseff, a notoriously gruff and demanding manager known for making subordinates break down in tears. And second, accept that “Dilma likes to be the minister” – that as a trained economist with a fervent belief in a strong state, she would insist on making many policy decisions, even minor ones, herself.

Rousseff is expected to finally replace Mantega this week with respected banker Joaquim Levy. But it’s unclear whether the job description has really changed since then and whether Levy will have the power and independence to execute the pro-business shift that investors are hoping for.

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Brazil Investors Like Dilma’s Cabinet

November 25, 2014

Kenneth Rapoza – Forbes, 11/24/2014

Investors from New York to São Paulo are increasingly pleased with Brazilian president Dilma Rousseff’s new economics team.  The names have not been made official yet. After a tight presidential race, which tested her and her party’s approval rating following 12 years in power, Dilma needs all the help she can get.

According to the local press, Dilma’s new economic team will be introduced by month’s end. Investors are anxious to see who will replace Guido Mantega as Finance Minister. Insiders say that Joaquim Levy will be Mantega’s replacement, along with Nelson Barbosa as Minister of Planning, and Alexandre Tombini still leading the Central Bank.

Levy is the most welcome name. He’s currently the president of Bradesco Asset Management, but is global enough to understand the external market forces at work in Brazil. He has held posts at the International Monetary Fund, was a visiting economist at the European Central Bank, and was the Treasury Secretary under Dilma’s political party companheiro, Luiz Inacio Lula da Silva, who served two terms as president before handing the torch to Dilma four years ago.

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3 Reasons Why Brazil’s State-Controlled Oil Giant Petrobras Should Be Privatized

November 21, 2014

Anderson Antunes – Forbes, 11/20/2014

One of the most famous songs by the late Brazilian rock star and songwriter Raul Seixas is entitled ‘Rent,’ in reference to what he considered to be the best solution for Brazil: literally, to rent the country for foreigners. The song was composed in 1980, at a time when Brazil was going through a difficult economic period marked by hyperinflation.

Fast-forward to 2014. Today the ghost of price increases gone out of control has come back to haunt Brazilians, partly due to a government-sponsored rise in fuel prices that resulted in consumer prices advancing 6.54% in the 12 months through mid-November, down from a rise of 6.62% through the previous month but still above the 6.5% ceiling of Brazil’s Central Bank target, according to the median of 22 market forecasts for the IPCA-15 inflation index.

Add to that a total lack of confidence from investors, a growing budget deficit, falling industrial production and rising poverty. Even the stability of the Brazilian job market, one of the few bright spots for the government, has begun to show signs of difficulties ahead: For the first time since October 1999 the weekly payroll numbers showed a net loss of 30,000 jobs last month, well below the market expectations of a gain of 56,000.

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Shortfall in Brazil crop bolsters sugar price

November 12, 2014

Leslie Josephs – The Australian Business Review, 11/13/2014

The sugar market gave investors a buzz yesterday, when news of a surprisingly sharp decline in Brazilian production sent prices to their biggest percentage gain in more than six weeks.

The report, by a Brazilian trade group, rattled investors who had made large bets that sugar prices would decline amid a global glut. Those bets largely hinge on a bumper Brazilian harvest flooding the market with supply. The country produces about a fifth of the world’s sugar.

Brazil’s main sugar growing region experienced its worst drought in decades earlier this year, hurting the development of sugar cane, and dozens of mills closed for the year because of poor weather and low prices, reducing Brazil’s output. But yesterday’s report was even weaker than expected.

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