Even bankruptcy can’t subdue Batista’s swagger 30 Oct 2013 The Brazilian tycoon is selling gas assets cheaply to a utility he partly owns, practically goading creditors of insolvent OGX. Their odds of recovering more money still improve by injecting new cash. Pushing these bondholders too far, though, could lead to a painful liquidation.
Brasilia sends Petrobras toward crash with reality 28 Oct 2013 Blame government policies like buying local for the 39 pct slide in the oil giant’s Q3 profit. Rising debt, with more investment needed, makes Petrobras look like a not-for-profit arm of President Dilma Rousseff’s administration. Even next year’s election might not change that.
Batista’s proposed gas sale looks like a giveaway 25 Oct 2013 The fallen billionaire’s OGX seems poised to unload wells for $100 mln, or barely half their value. They already generate some $1 mln of revenue a day, with plenty of untapped capacity. As demand soars in Brazil, bargain hunters stand to profit handsomely from the tycoon’s woes.
Brazil’s wasteful state bank can learn from Chile 23 Oct 2013 Most of the $80 bln BNDES lends every year goes to big firms like Vale or Petrobras, which could easily borrow from private sector lenders. The OECD thinks that’s bad policy. CORFO, Chile’s development bank, does a better job directing resources where they’re actually useful.
Brazilian auction shows the price of oil populism 22 Oct 2013 Roping Shell and Total into the development of a giant offshore oilfield qualifies as a partial win for Brasilia. Unfriendly policies scared off others, who might have given Brazil a bigger share of profits. President Dilma Rousseff is lucky her pandering didn’t do more damage.
It’s time to throw good money after Batista 18 Oct 2013 Liquidating Brazil’s OGX probably would bring creditors just 10 cents on the dollar for their $3.6 bln of bonds. A $150 mln injection, while ousting founding tycoon Eike Batista, may buy enough time to get production going at its main field. In this case, it’s the least bad plan.
Brazil faces a "lose, lose" in bailing out Batista 15 Oct 2013 Giving the fallen entrepreneur extra time to pay his debts puts Brazil’s government in a dilemma. Letting his OSX shipyard collapse makes it hard for drillers to obey “buy local” rules. Yet rescuing the unpopular tycoon is politically pricey for President Dilma Rousseff.
Brazil rate hikes keep pulling wrong lever 10 Oct 2013 The central bank jacked up the Selic for the fifth time since April, to 9.5 pct. With inflation below 6 pct, it punishes businesses and the country’s weakening budget. Meanwhile, the state development bank is draining resources. Brazil’s main problem isn’t monetary but fiscal.
Telecom Italia’s Brazil goals are ambitious 10 Oct 2013 The debt-laden telco wants $12 bln for its 67 pct stake in TIM Brasil, the country’s second-biggest mobile operator. But eking out such a rich price will be tough. A carve-up by rivals would be logical but controversial. And there aren’t many credible outside bidders.
BRIC woes make African economies shine brighter 8 Oct 2013 The not-so-dark continent will outpace all but one of the BRICs next year, the IMF now believes. Policy failures in Brazil, Russia, India and China have led to scaling back of growth. These bruised giants may look to African stars like Ghana and Nigeria for economics lessons.
Portugal Telecom’s Oi deal is a good stepping stone 2 Oct 2013 The long-anticipated 5.6 bln euro merger of the Portuguese company with Brazil’s largest fixed-line operator creates a highly indebted enterprise, even after a capital hike. And claimed synergies are punchy. But teaming up makes sense in a consolidating Latin American market.
Dissing Uncle Sam is a low-cost political tactic 25 Sep 2013 Brazil’s Dilma Rousseff canceled a U.S. state visit and made a critical speech at the UN. Yet even pariah Iran has shown long-term growth on a par with some U.S. allies like the Philippines and Egypt. Bashing Washington doesn’t seem too costly. Wall Street is another matter.
Only PDVSA can make Petrobras look commercial 24 Sep 2013 The unreliable Venezuelan state oil firm isn’t paying its way, so the Brazilian giant is taking over a joint $17 billion refinery project. It shows how political deals can go astray. Brasilia should take note. The more it interferes, the more Petrobras looks like another PDVSA.
Brazil’s pushy oil nationalism five years late 20 Sep 2013 Costs, poor terms and state meddling persuaded the likes of Exxon to avoid the auction for the country’s largest field. Brasilia may have gotten away with it before the jump in global reserves from the shale revolution. Now playing hardball may mean lower output – and less lucre.
Latin America has more to fear than Fed itself 16 Sep 2013 Declining growth rates present the worst contagion problem. An interactive Breakingviews analysis suggests Venezuela and Brazil are most vulnerable, with Mexico and Argentina less so. The region’s politics and more homogenous profile than Asia leave it exposed in other ways.
Brazil’s state bank needs diet, not more feeding 12 Sep 2013 BNDES already lends twice as much as the World Bank. Now Brasilia wants to inject another $9 bln. That’s a bad deal for taxpayers. Easy lending to Eike Batista’s sinking EBX is the latest in a series of flops. The bank drains Brazil’s Treasury without boosting returns.
Batista’s bravado hastening his own death spiral 10 Sep 2013 Sinking oil firm OGX has every right to insist founder Eike Batista honor a pledge to inject $1 bln. But Brazil’s one-time richest man no longer has the cash. Even a down payment would require stock sales in his other plunging firms, hastening the demise of his empire.
Emerging economies need to change to compete 5 Sep 2013 -The World Economic Forum’s annual competitiveness rankings hold little succour for some countries that are feeling market pressure. Brazil and India are deteriorating, Venezuela and Argentina plunging. Some Asian countries fare better but reforms are vital almost everywhere.
Petrobras biggest loser of Brazil’s currency blues 3 Sep 2013 With the bulk of revenue in reais, the state oil giant will find servicing its $70 bln of U.S. dollar-denominated debt a painful affair. While a default looks unlikely, the currency mismatch will make it harder for Petrobras to fund its $236 bln capital expenditure plan.
Botched Batista bankruptcy another risk for Brazil 30 Aug 2013 Having to restructure Eike Batista’s collapsing empire is embarrassing enough for Brazil. But Latin America’s most chaotic bankruptcy regime now threatens further harm to the country’s reputation. A high-profile fleecing of foreign creditors would imperil future investment.