Brazilian oil troubles stay all in the family 18 Jun 2013 First, BTG Pactual extended credit to Eike Batista’s struggling empire. Now, the investment bank led by Andre Esteves has emerged as the unlikely buyer of assets from state-controlled Petrobras. The sketchy details on both deals only add to the unhealthy aura of crony capitalism.
Inflation arises from popping EM asset bubbles 5 Jun 2013 Mere talk about Fed tapering has been enough to reverse the previous flood of foreign money into emerging market bonds and stocks. As these bubbly assets deflate, currencies are falling in Turkey, Brazil and Mexico. That will push up inflation and cut into growth.
Brazilian airline IPO requires sky-high optimism 4 Jun 2013 David Neeleman, JetBlue’s founder, is taking public his latest creation, Azul. Based on its U.S. cousin’s valuation, it’s worthless. Potential shareholders need to assume Azul keeps climbing fast and encounters no economic or operational turbulence to justify jumping on board.
Brazil’s oil ambitions put squeeze on Petrobras 28 May 2013 The government is auctioning a 12 bln-barrel crude field to revive its goal of being a global player. Petrobras is guaranteed a 30 pct stake. That should be good news. But the project will add more debt and expenditure for the already struggling and overleveraged state oil giant.
Did Brazil miss a trick on Petrobras bond sale? 17 May 2013 President Dilma Rousseff uses the oil giant for many nationalistic purposes, though strengthening domestic capital markets isn’t apparently one. Issuing a slice of this week’s $11 bln bond offering in reais, though costly, would at least have been a better sort of meddling.
Shareholders wise up to Pactual’s lumpy earnings 8 May 2013 The Goldman Sachs of Brazil missed Q1 estimates, posting its lowest returns in a while. The culprit: a slump in revenue from investing its own and other people’s money. Pactual’s still a better performer than U.S. rivals. But trimming its valuation to twice book looks reasonable.
NAFTA veteran is trade-friendly choice to run WTO 6 May 2013 The two men vying to replace Pascal Lamy are both Latin American. But Roberto Azevedo has spent 15 years fighting Brazil’s protectionist corner, while Mexican Herminio Blanco negotiated NAFTA and has 13 years of private sector experience. He looks the likelier free-trader.
Brazil boxes itself into corner on growth 18 Apr 2013 The central bank just raised interest rates to fight inflation. GDP expansion, meanwhile, is already stalling. High public spending and rapid private credit growth, the fuels for Brazil’s boom, are both reaching their limits. President Rousseff may be running out of options.
Eike Batista might be too big to fail 11 Apr 2013 As the billionaire fights to shore up his embattled EBX empire, Brazil’s state-controlled oil giant Petrobras is considering a lifeline of sorts. It would probably be in the form of port deals. For the government to step in, even indirectly, shows how influential he has become.
Petrobras struggles even with baby steps 27 Mar 2013 Brazil’s state oil giant needs to find $15 bln to afford $50 bln of government-mandated capital spending. It’s already cut the dividend. Now it plans to sell its Nigerian wells. That may only raise a third of what’s needed. And Petrobras has a poor record of flogging assets.
BRICS inch towards alternative to dollar bloc 27 Mar 2013 Brazil and China will use their own currencies for trade and the five nations are still working on creating a rival to the World Bank. With nearly half the world’s population and 15 pct of its trade - and despite flawed policies - the group is a useful counterweight.
Rousseff’s popularity a lagging economic indicator 26 Mar 2013 The Brazilian president has an approval rating of 79 pct even with GDP growth running less than 1 pct and inflation rising. Past expansion, high employment and popular social policies are buoying Rousseff for now, but the slowdown and weak productivity growth mean it won’t last.
Billionaire Batista’s X factor becoming big loser 20 Mar 2013 The Brazilian entrepreneur needs to sell part of MPX, a $3 bln electricity firm, to calm creditors. He borrowed against ventures that went public too early and have slumped 70 pct in value. The prospect of more margin calls is a gloomy one for his creations’ battered investors.
Petrobras proving better at finance than oil 5 Feb 2013 Brazil’s state oil giant generated a 53 pct gain in quarterly profit by selling government bonds. The company’s costs are soaring, production is falling and debt is growing. Financial dealings couldn’t preserve the dividend - and suggest Petrobras is running short of ideas.
Brazil’s power troubles dim economic prospects 9 Jan 2013 A bad drought could require electricity rationing. Brazil is already battling weak investment and higher labor costs as it prepares to be a global sports host. The 2001 energy crisis sapped 2.6 points of GDP growth. Dilma Rousseff’s troubleshooting list is getting awfully long.
Latam can rely on masses for next phase of growth 31 Dec 2012 A few key people like the world’s richest man and showy political leaders have epitomized the region for years by spearheading the commodity-led, export economies. In 2013, a burgeoning middle class, helped by low interest rates, will make a mark powering Latin America’s future.
$2.3 bln Brazilian insurer IPO looks too pricey 19 Dec 2012 That would value the unit state-owned Banco do Brasil wants to hive off at 12.5 times earnings - richer than rivals. BB Seguridade may be a good business. But it will remain majority-owned by a bank that does the bidding of an interventionist government. That warrants a discount.
Brazil’s ailing oil industry needs a nudge 13 Dec 2012 Petrobras can’t meet output targets. The fallout from Chevron’s spill is making it hard for companies to hire. And Eike Batista overhyped OGX, whose value has plummeted. The country’s once-promising oil bounty is going to waste. A revival may need fresh thinking from Brasilia.
Petrobras wrestles with local and global ambitions 6 Dec 2012 To play on the world stage, Brazil’s oil champion must branch out. That may be why it seems reluctant to sell Gulf of Mexico assets. Yet the company also needs cash for a domestic agenda that includes a $237 bln capex plan. With Brasilia’s meddling, Petrobras can’t have it all.
IPO may be better option for Vivendi’s Brazil unit 12 Nov 2012 The French company is courting top names to unload GVT. But Telecom Italia and Brazil’s Oi can’t afford the $9 bln price tag. And Brasilia could deny Carlos Slim’s America Movil a bigger role. With a full sale tough to achieve, returning GVT to the market may make sense.