Brazil is not an easy place to start a business. The World Bank ranks it 120th out of 183 countries—worse than Burkina Faso or Nigeria. Take one small example. Until recently, you needed at least two partners to form a limited-liability company. Sole traders had to find a “1% sócio”—an employee, friend or family member willing to lend his name to the articles of association, or a shell company set up solely to hold a tiny share. Things may have just got a little easier (The Economist).
Economists cut forecasts for Brazil’s year-end inflation rate for a seventh consecutive week and trimmed growth predictions, a weekly central bank survey showed, suggesting concerns about a prolonged slowdown (Reuters).
Brazil’s economy grew at its fastest pace in 19 months in November, reversing a three-month contraction, as a recovery in consumer spending helped the world’s second-largest emerging market shrug off a global slowdown. Yields on interest rate futures rose (Bloomberg).
The United Nations (UN) said that a global recession was likely, and lowered its gross domestic product (GDP) growth estimates for several countries including Brazil. In a document, the UN revised its estimates for Brazil’s GDP growth in 2012 from 5.3 to 2.7 percent. The figures are below the average growth estimated for Latin America, which is 3.6 percent (Xinhua).
Brazil is considering injecting more funds to the National Development bank, BNDES for the fifth year running in anticipation of a possible shortage of long term credit in the economy, said Arno Augustin, Secretary of the Treasury (MercoPress).
Brazilians are generally not big fans of DIY, but when it comes to the economy, the government is always keen to resort to some good old Do-It-Yourself. And their favourite tool? BNDES – the super-state bank with a loan book about four times bigger than the World Bank’s. Isn’t it time for Brazilians to wean themselves from the BNDES? (BeyondBRICs FT)
Following the announcement of the reduction of the Selic by 0.5 percentage points, the National Industrial Confederation (“CNI”) said there should be further reductions. In a note, the CNI declared that the Brazil’s basic interest rate, now at 10.5% per year, remains above international standards, which means there is room for more cuts (Agencia Brasil).
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The next coffee crop in Brazil, the world’s largest producer, may not be enough to meet domestic and export demand even with record production forecast, according to Escritorio Carvalhaes, a Santos, Brazil-based broker (Bloomberg).
The BNDES has created a new program to encourage the production of sugarcane by financing the renovation of old sugarcane farms and the expansion of the cultivated area. The BNDES Prorenova has a budget of R$ 4 billion, and its launch encourages the renewal and expansion of sugarcane farms, key to increasing Brazilian sugarcane productivity and, thus, reducing the industrial idleness of sugar and ethanol production. The program is open until December 31 this year, and it is hoped that resources will be able to finance the renovation and/or expansion of more than one million hectares of sugarcane (BNDES).
Brazil is the next great frontier for the wine world. Brazil now drinks just 1.6 liters of wine per capita per year—significantly less than some Muslim countries like the Maldives and United Arab Emirates, according to the Wine Institute. By comparison, the US drinks 9 liters per capita per year. Most European countries drink more than 20 liters per year (Palatepress).
Tam SA of Brazil and Lan Airlines SA of Chile sought approval to swap shares and delist Tam’s, after gaining antitrust clearance last month for a $3.2 billion transaction creating the world’s second-largest carrier (Bloomberg).
Brazil’s effort to prop up small banks may instead steer financing to international companies’ local subsidiaries, two people familiar with the matter said. Rules that take effect Feb. 24 let large Brazilian banks use part of their central-bank reserve requirements to buy credit portfolios and bonds from lenders with capital below 2.2 billion reais ($1.1 billion). Of the 30 billion reais in financial-system injections the central bank projects will result, as little as 10 percent may go to local banks (Bloomberg).
MPX Energia SA, the energy company controlled by billionaire Eike Batista, signed a contract with General Electric Co. worth more than $1.2 billion to buy 19 gas turbines for its thermoelectric complex in the Parnaiba Basin in Brazil’s state of Maranhao (Bloomberg).
Sao Paulo state may sell its 36 percent stake in Cia Energetica de Sao Paulo, Brazil’s second- biggest utility by market value, after a tussle over licenses is resolved, Chief Executive Officer Mauro Arce said. The company, known as Cesp, is pressing the federal government to extend concessions on 67 percent of its generating assets, which expire in 2015, Arce said (Bloomberg).
MINING & STEEL
ThyssenKrupp’s former Chief Executive Ekkehard Schulz said he should have acted sooner on cost overruns at the German steelmaker’s plant in Brazil, ahead of a shareholders’ meeting at which management is expected to face the investors wrath (Reuters).
ThyssenKrupp AG is considering a sale of its $12 billion steel plants in Brazil and the U.S. state of Alabama. Brazilian miner Vale, which owns around a quarter of the plant in the state of Rio Janeiro, is a potential buyer of that one (Reuters).
Votorantim Industrial, Brazil’s largest diversified industrial conglomerate, will use proceeds from the sale of its stake in steelmaker Usiminas to expand in mining and cement output, chief executive Raul Calfat said (Reuters).
MMX Mineracao & Metalicos SA, the miner controlled by Brazil’s richest man Eike Batista, said it’s not interested in a deal with Ferrous Resources Ltd after the closely held iron-ore producer proposed a takeover (Bloomberg).
Brazil’s stellar and successful attempt to draw oil out of the bedrock of the sea, under salt and stone, has its mining companies think they can do the same for lithium, cobalt and phosphates. It would be a first. No company and no country has ever spent precious capital on trying to draw minerals from the ocean floor. But after looking at its reflection in the Atlantic and falling in love with what it saw, Brazil now thinks they can mine the sea (Forbes).
OIL & GAS
Three of Europe’s biggest oil companies are expected to bid for Anadarko Petroleum’s Brazilian business, the Financial Times reported. The newspaper cited people with knowledge of the talks as saying France’s Total, the Norwegian state-controlled energy group Statoil and Denmark’s Maersk Oil, are expected to compete for the business (Reuters).
Petrobras said it has signed a deal to build the company’s first floating oil terminal, a key innovation that could help it overcome a logistical barrier to developing oil fields far from shore. Tanker Pacific Offshore Terminals was selected to build the first floating storage and offloading unit, also known as an FSO. The unit will be built from an existing tanker hull and installed about 80 kilometers off the city of Macae, Petrobras’s base of operations for the Campos Basin (FoxBusiness).
Joao Pereira Coutinho, the Portuguese investor who sold his stakes in five Brazilian shopping centers, plans to avoid investing in the country’s real-estate market after prices rose to “historic” highs. “Today our focus in Brazil is not in real estate,” he said in an e-mailed response to questions. “The real-estate market in Brazil is heated” (Bloomberg).