News from Brazil

Brazil Weekly, February 7th

In Uncategorized on February 7, 2010 at 1:03 pm

POLITICS

Sao Paulo Governor Serra, the front-runner in Brazil’s coming presidential contest, has done a decent job running its biggest state. But to keep his lead he must get campaigning. Read the full article in The Economist.

Just weeks away from the beginning of what will undoubtedly prove to be months of fierce presidential campaigning, José Serra, current governor of Sao Paulo, remains in a strong position. Despite not having formalized his candidacy, Serra continues to come out on top in both simulated and spontaneous polls (Rio Times).

With recent developments putting the Marvelous City center-stage during the next decade, both in Brazil and the world, the state government elections have taken on a higher profile. Currently, it seems Rio runoffs will be shaped as much by national party politics, as by regional polling (Rio Times).

Brazil’s justice minister became the first of several cabinet members to resign so he could run in this year’s election, raising the prospect that President Luiz Inacio Lula da Silva’s government could lose steam well before its term ends in December (Reuters).

Dilma Rousseff should be favored to win this year’s presidential election over likely opposition candidate Sao Paulo Governor Jose Serra, the Eurasia Group said. The “election certainly promises to be very competitive, but President Luiz Inacio Lula da Silva’s candidate, Dilma Rousseff, should be considered favored to win” against Serra, the Washington-based political risk research company, wrote (Bloomberg).

ECONOMY

Automobile output in Brazil jumped in January from a year earlier, an indication that government-sponsored incentives helped propel domestic demand for new cars, the national automakers’ association Anfavea said (Reuters).

Brazilian policy makers said that rising domestic demand is reducing slack in the economy and increasing the risk that inflation may quicken, according to the minutes of their last meeting (Bloomberg).

BANKING & FINANCE

Brazil and Argentina called for reforms at the Inter-American Development Bank, saying the regional lender had failed to understand the needs of Latin America during the global financial crisis (Reuters).

BlackRock, the world’s largest independent money manager, sees Brazil’s benchmark Bovespa index rising to 77,000 by the end of the first quarter on rising demand for exchange-traded funds, a top executive said (Reuters).

Banco do Brasil, Latin America’s largest bank by assets, said its fourth-quarter earnings would receive a boost of 1.6 billion reais ($848.8 million) after it recalculated payments to an employment pension plan (Reuters).

BIOFUELS

The $12 billion joint venture unveiled on February 1st by Shell and Cosan, a big Brazilian producer of ethanol, marks something of a reversal. Read why in The Economist.

Brazil’s ethanol industry, which invested heavily to boost output of the cane-based biofuel, is counting on a tie-up between sugar and ethanol producer Cosan and Royal Dutch Shell Plc to revive its prospects after exports fell short of expectations (Reuters).

Brazil will reduce its Cide tax on gasoline at the pump, Brazil’s finance minister, Guido Mantega, said. The measure, which will last from Feb. 5 through April 30, is aimed at offsetting the effects of the reduction of ethanol mix in gasoline (Reuters).

Mergers and acquisitions have been gaining momentum in Brazil’s sugar and ethanol sector since the 2008 credit crisis overwhelmed mills laden with too much debt. Read the full list at Reuters.

Raw sugar prices probably will decline from a 29-year high this year as a “huge increase” in production driven mainly by Brazil may balance the market, according to German research company F.O. Licht (Bloomberg).

DEFENCE

France is confident that Brazil will choose French-made Rafale jets as its next generation fighter planes, trade minister Anne-Marie Idrac said (Reuters).

RIO

The recent attention on Rio’s metro subway system has citizens wondering whether the proposed extension to Barra will be ready in time for the 2016 Olympic Games. Nevertheless, progress is being made and seemingly ahead of schedule; the new station in Ipanema, scheduled to open in 2010, was inaugurated in last December, a sign that the metro is well on its way to meeting the 2016 target. Read the full story in the Rio Times.

BUSINESS

Votorantim Cimentos said it reached a deal to buy a stake in its Portuguese counterpart Cimpor (Reuters).

Brazilian machine tool maker Industrias Romi SA submitted an unsolicited all-cash offer to buy Hardinge Inc of New York for $90 million, saying it has been rebuffed by the U.S. precision metal-cutting machine company’s management (Reuters).

Brazil’s anti-trust authority imposed restrictions on Grupo Pao de Acucar from immediately merging its operations with two major retailers it acquired in 2009 (Reuters).

Giant petrochemicals producer Braskem is looking to make more acquisitions in the U.S. market, the company’s chief financial officer said, after the company announced that it would buy a unit of Sunoco Inc (Reuters).

OIL & GAS

Petrobras may raise as much as $30 billion from minority investors in a planned share sale this year. “We expect to raise between $15 billion to $30 billion from the minority shareholders,” Almir Barbassa, chief financial officer of the Rio de Janeiro-based oil producer, told the press while opening a new office in Rotterdam (Bloomberg).

Keppel Corp, the world’s largest oil rig builder, said it has won a $1 billion contract with a joint venture partner to build and operate a rig platform in Brazillian waters (Reuters).

Singapore’s Sembcorp Marine, the world’s second largest offshore oil rig builder, said it has bought land for a new shipyard in Brazil. The freehold site of 825,000 square metres is near the Espirito Santo Basin, which is one of the country’s recently discovered offshore giant pre-salt oil basins (Reuters).

Brazilian oil start-up OGX said it estimated recoverable oil reserves from its OGX-3 well at 500 million to 900 million barrels (Reuters). OGX also said it estimated recoverable oil reserves from its OGX-4 well at 100 million to 200 million barrels (Reuters).

BP Plc said it is looking for oil exploration opportunities in Brazil, where some of the biggest finds in decades have been made in recent years, but downplayed speculation it was eyeing a tie-up with players active in the area (Reuters).

Cosan, the world’s largest maker of ethanol from sugar cane, may bid for ENI Spa’s  Brazilian natural-gas distribution assets (Bloomberg).

ENERGY

Brazil’s government has granted an environmental license for the construction of a controversial hydroelectric dam in the heart of the Amazon rainforest, the Environment Minister said (Reuters).

Brazil’s infrastructure is in “terrible shape” and the country isn’t saving and investing enough, holding back growth, said former central bank President Arminio Fraga. Fraga, who is now chairman of the BM&FBovespa SA exchange, said he’s concerned that foreign investors “think Brazil is perfect,” which may create overconfidence in the country (Bloomberg).

Brazil will hold an auction on May 2 for contractors to build a $17.4 billion high-speed rail to link the cities of Sao Paulo, Rio de Janeiro and Campinas, the president’s chief of staff, Dilma Rousseff, said (Reuters).

Brazil may revive operations of Telebras SA, the country’s former state- owned telephone holding company, to provide broadband Internet service, said Rogerio Santana, the Planning Ministry’s Secretary of Logistics and Information Technology (Bloomberg).

HOTELS

Shares in Hoteis Othon SA, a Rio de Janeiro- based chain of hotels, jumped to the highest in more than two years after the government said it would provide 1 billion reais in financing to prepare hotels for the 2014 World Cup. Brazil’s national development bank, known as BNDES, opened up financing to expand and update the country’s hotel infrastructure, Folha de S. Paulo reported (Bloomberg).

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