World Bank takes on Wall St over Itaú’s stitch-up 9 Jul 2014 The Washington lender’s IFC is hiring an independent adviser to analyze the Brazilian bank’s bid to control Chile’s CorpBanca without paying a premium to minority shareholders. That could challenge the fairness opinions put forth by Goldman and BofA in support of the deal.
Numbers show Germany will beat Brazil to World Cup 27 Jun 2014 The football-mad host nation has cruised into the knock-out stages of soccer’s jamboree. Some fancied rivals have gone home early. But a Breakingviews calculator – based on hard numbers like transfer value, population and public engagement – suggests Germany will lift the trophy.
Brazil’s companies need soccer team’s global clout 12 Jun 2014 Itaú and 3G could lead the attack with AB InBev in midfield and Petrobras in goal. But the world’s most glamorous soccer nation, and seventh-largest economy, has few global corporate stars. In a World Cup for business, Brazil would struggle to get past the group stage.
Rob Cox: Investors cheer for Brazil World Cup rout 10 Jun 2014 Each dip in Dilma Rousseff’s poll numbers bumps the Bovespa. Markets are hoping her experimental economic policies will come to an end at the October ballot. With labor tight and millions lifted from poverty, however, it will take crushing defeat on the pitch for that to happen.
BRICS bank: a good idea that can do grave harm 6 Jun 2014 Brazil, Russia, India, China and South Africa are sponsoring a World Bank clone. The new lender could ease the infrastructure deficit in emerging markets, but could also end up backing social and environmental disasters. The bank’s governance will decide if it’s a boon or a bane.
Joke’s on lenders in $2.6 bln Batista payback plan 19 May 2014 The fallen Brazilian billionaire wants investors in his bankrupt shipbuilder, OSX, to wait until 2040 for full payment and proposes an $11,000 installment after a year. To think he once boasted that his assets were “idiot proof.” His chutzpah now threatens OSX’s reorganization.
Review: Brazil’s toughest tests lie off the pitch 16 May 2014 Protesters at this year’s football World Cup have much to bemoan, says Michael Reid in a new book. Brazil taxes and spends like a European country with “distinctly Latin American” results. Worse, a pensions crisis looms. Reid’s case for cutting back the state is compelling.
Brazilian blunders fuel a better Mexican oil plan 2 May 2014 State meddling, onerous buy-local rules and limits on foreign control slowed Brazil’s expected boom in crude. So its rival to the north has proposed looser regulation and more freedom for government-owned Pemex. The scheme faces hurdles, but it’s a recipe for boosting output.
Brazil’s "Come Back Lula" movement is misguided 2 May 2014 Populist calls for Dilma Rousseff’s predecessor to replace her in October’s presidential election reflect understandable nostalgia for the growth during his time in office. But rising commodity prices, not smart policies, made Brazil richer. Voters can’t count on those again.
Suppose Brazilian CEOs saw light on pay secrecy 25 Apr 2014 Bosses of Vale, Ambev and other companies are fighting in court to keep their compensation under wraps. Concerns over privacy and kidnapping loom large. Yet there’s evidence that transparency could make them richer. Breakingviews imagines a closed-door meeting on the subject.
Texas cracker spat hides Petrobras waste at home 22 Apr 2014 The state-run energy giant paid too much in buying a U.S. refinery for $1.2 bln in 2006, when President Rousseff chaired the board. But at $20 bln, a plant in Brazil is costing far more than similar facilities abroad. It’s a cash drain Petrobras and its investors can ill afford.
U.S. stalls IMF reforms at risk of own ambitions 14 Apr 2014 Finance ministers meeting in DC blasted Congress’ refusal to back more lending power for the fund and a bigger voice for the likes of China and Brazil. Harsh words alone won’t do much. But votes against Ukraine loans and other plans would inflict a high price on foot-dragging.
Oi’s botched offering besmirches Brazilian markets 3 Apr 2014 The telecom firm’s $10 bln share issue grants favors to top owners while severely diluting minority holdings. And the CEO’s big mouth almost derailed the deal. Still smarting from the failures of tycoon Eike Batista, Brazil can’t afford to test investor patience much further.
Itaú schools investors on minority rights in Chile 12 Mar 2014 The Brazilian bank’s $3.7 bln deal to take control of CorpBanca shafted public shareholders, including the Bank of Chile and the World Bank’s IFC. A U.S. fund is making a stink. But the best it’s likely to come away with is a useful, if painful, lesson in governance.
Russia harms the BRICs and adds to global risks 12 Mar 2014 The intervention in Ukraine is bad for Russia’s own economy and will do further harm to emerging economies as they struggle with reduced capital inflows and weak exports. Investors are shifting to developed markets, increasing the risks there.
BTG Pactual suffers surprisingly few growing pains 19 Feb 2014 The investment bank run by André Esteves has bought rivals, added staff and is beefing up commodities – a business its Wall Street peers are trimming. And Brazil, its home market, is struggling. Yet last year’s net income only took a 14 pct hit. That shows remarkable resilience.
Petrobras risks becoming Latin America’s Gazprom 6 Feb 2014 Brazil’s petro-giant increasingly resembles Russia’s gas monopoly as state meddling and rampant spending destroy value and crowd out more productive investment. Petrobras shares have fallen so low it’s like 2007’s “gift from God” never arrived. It’s not too late to change course.
Emerging vacuum a harbinger of global downdraught 31 Jan 2014 Brazil’s central bank president complains that rising developed country rates are like a “vacuum cleaner.” But tighter global money is needed. Emerging economies must adapt and improve their own fundamentals. Their woes are a harbinger of the developed market pain to come.
Brazil’s banking bigwigs samba their way north 30 Jan 2014 Itaú is buying control of a Chilean bank just as investment bank BTG Pactual sallies into Mexico. With Brazil wobbly, regional diversification makes sense. But succeeding in new markets may require toning down Brazilian bravado, on display in Itaú’s treatment of Chilean investors.
Rousseff’s postcard from Davos may not reach home 24 Jan 2014 In her World Economic Forum debut, Brazil’s president preached to the capitalist choir. Promises of fiscal virtue, price stability and privatization should delight investors. An upcoming election, though, probably means it’ll take more emerging market turmoil to be less populist.