News from Brazil

Business & Economy

In Brazil on December 17, 2010 at 12:43 pm

ECONOMY

Eike Batista, Brazil’s richest man and the world’s eighth richest man said that it’s time for Americans to “wake up” to the economic giant to their south. But many Americans have already been awake to Brazil for at least some time (Forbes).

Inflation has risen by it’s highest degree in five years, to 0.83 percent in November, as published by the IBGE (Brazilian Geographic Statistics Institute) (The Rio Times).

The BNDES signed a loan agreement with German development bank (KfW) for US$ 68 million to finance projects for small hydroelectric plants (PCH) to be implemented in Brazil by private Brazilian companies (BNDES).

Brazil’s central bank launched new banknotes with different denominations. The new Brazilian real notes have more tactile identification marks to help the visually impaired. Although there are some changes in the design of the new banknotes, the figures and animals on the back of the notes remain the same, with a jaguar depicted on the 50 real note and a grouper fish on the 100 real note. The color of the 50 and 100 real notes remains unchanged (Xinhua, picture from France24).

The president of the BNDES, Luciano Coutinho, and the head representative of the Inter-American Development Bank (IDB) in Brazil, Fernando Carrillo, signed a loan agreement in the amount of US$ 3 billion, related to the 2nd Agreement for the Conditional Credit Line (2nd CCLIP), earmarked to finance investments of Brazilian micro, small and medium-sized companies (MPMEs). The 2nd CCLIP comprises three credit tranches worth US$ 1 billion each (BNDES).

Brazil’s government unveiled a series of measures aimed at boosting long-term, private-sector credit, a bid to wean Latin America’s biggest economy off state lending to fuel growth. The measures could help Brazil move away from the heavy public lending of recent years that critics say crowded out private credit as the country readies major infrastructure projects for the 2014 World Cup and 2016 Olympics (Reuters).

Standard & Poor’s affirmed Brazil’s “BBB” credit rating on strong institutional framework and commitment to prudent macroeconomic policies by the new administration (Reuters).

Top company bosses in Brazil are earning higher salaries than their developed-world counterparts in New York and London (Reuters).

Brazil’s antitrust agency ordered an investigation into automakers Volkswagen AG, Fiat SpA and Ford Motor Co. to determine whether their policies toward auto-parts providers are abusive. The agency, known as Cade, wants to determine if the automakers are “abusing their economic power and illegally exercising their property rights on the auto parts” (Bloomberg).

AVIATION

With Brazil preparing to lift the foreign ownership cap on its air carriers from 20% to 49%, expect more mergers and capital-raising in the next two to three years — and opportunities for foreign airlines to penetrate Latin America’s largest market (Wall Street Journal).

Constantino de Oliveira, the founder of low-cost airline Gol Linhas Aéreas Inteligentes S.A. was arrested in Brasília in connection with the attempted murder of his former son-in-law (Wall Street Journal).

Which of Brazil’s airlines will have the better strategy for growth, Gol or TAM. Read an interesting analysis on Centre for Aviation.

OIL

Petrobras announces the start up of the Extended Well Test (EWT) for the Carimbé reservoir, in the Campos Basin. Discovered last May, the reservoir is located 108 kilometers off the coast of Rio de Janeiro. This test, which is being carried out with well 6-CRT-43-RJS, marks the beginning of pre-salt oil exploration in the central area of the sedimentary basin (BW).

Petrobras acquired 30% of the capital stock of Alberto Pasqualini Refinery S.A. – Refap, for $850 million, being $350 million for Repsol’s stake in the asset and $ 500 million for the corresponding portion of Repsol’s debt in Refap. With this acquisition, Petrobras once again holds 100% interest in Refap, the fifth largest (and very modern) refinery in Brazil (BW).

Petrobras sees oil prices in the long term staying between $65 and $85 per barrel, chief executive officer Jose Sergio Gabrielli said (Reuters).

Jose Sergio Gabrielli will stay on as chief executive of Petrobras in President-elect Dilma Rousseff’s administration (Reuters).

BANKING

Banco do Brasil SA, Brazil’s biggest federally controlled lender, will announce the purchase of a bank based in Florida by the beginning of next year. Banco do Brasil will also buy another bank in Chile by the end of next year and is looking at other lenders in Colombia and Peru. Within five years, the bank plans to get 9 percent of its profits from abroad, compared with 1 percent currently (Bloomberg).

MINING

MMX Mineracao & Metalicos SA, the iron-ore miner controlled by Brazilian billionaire Eike Batista, plans to invest 5 billion reais ($2.9 billion) to expand mines in Brazil as Asian demand for raw materials increases. The Rio de Janeiro-based company’s board approved 3.5 billion reais of investment at the Serra Azul project, including a plant to process as much as 24 million metric tons of ore a year. MMX also plans to spend 1.5 billion reais at its 10 million-ton-a-year Bom Sucesso project. Both projects are in Brazil’s southeastern Minas Gerais state (Bloomberg).

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