News from Brazil

Brazil Business & Economy News

In Brazil on March 2, 2012 at 11:35 am

ECONOMY

Brazil posted a record primary budget surplus in January, the latest evidence President Dilma Rousseff’s push for fiscal restraint is helping pave the way for lower interest rates (Reuters).

Concerns of a U.S.-style credit bubble in Brazil have been circulating in and out of the headlines for over a year now. This is because high inflation and high interest rates have impacted the ability of the Brazilian consumer to repay debt. But Marcelo Kfoury, Citi’s chief economist in Brazil doesn’t think it has a credit bubble (Business Insider).

The number of active Internet users in Brazil rose two percent in January and more than 11 percent over the past 12 months to reach 47.5 million, IBOPE Nielsen Online reported (AFP).

BUSINESS

U.S. real estate developers Related Group and Related Cos will invest $1 billion over the next three years in Brazil, where demand for residential and commercial property looks unabated despite waning economic growth (Reuters).

BASF SE, the world’s biggest chemical maker, is in talks with Royal Dutch Shell Plc to determine who should pay a 490 million-euro ($653 million) fine for contamination in Brazil. The site in Paulinia was “significantly” contaminated by the production of crop protection products, and BASF and Shell were jointly ordered in August 2010 to pay damages to former employees for medical treatment and personal suffering, BASF said in its 2011 annual report (Bloomberg).

The gap between academia and industry in Brazil arose out of political turmoil. An overview of science in Brazil published in December 2010 in the journal Science, suggests that Brazil’s military dictatorship from 1964 – 1985 was the root cause of the universities’ aversion to private enterprise (Txchnologist).

When you think of Brazil, you may think of it as the South American birthplace of music genres like the samba or bossa nova. But for the past few years, Brazil has become one of the meccas of electronic music too.  A title that it now shares with the likes of Germany, France and the United States, where e-music is not only a controversial topic (is it a form of art or not?) but also big business (Forbes).

The Survey of Accommodation Services is conducted by IBGE in partnership with the Ministry of Tourism. It has the purpose of portraying the accommodation capacity of the country by identifying the types and categories of the accommodation establishments and measuring the number of accommodation units and beds (IBGE).

AGRI ETC

Sugar output in Brazil’s Center South, the world’s largest producing region, dropped 6.6 percent after growers harvested the smallest crop in four years, industry association Unica said (Bloomberg).

AVIATION

Embraer said it had sold three E175 and one E190 aircraft to Estonian Air, which also contracted a further eight planes, four E170 and four E190, through leasing contracts with other companies (Reuters).

Gol received approval this month from Brazil’s civil aviation agency, known as Anac, to operate 14 flights a week to the U.S. and has a period of 180 days from Feb. 17 to request the routes it wants to operate (Bloomberg).

Getting Brazil’s overcrowded airports ready to play host to soccer’s 2014 World Cup and the 2016 Olympic Games has run into an unexpected obstacle: airplane cemeteries on the tarmac (Wall Street Journal).

AUTOMOTIVE

Brazil car and light truck sales fell 6.6 percent in February from January and 8.9 percent from a year earlier, after the Carnival holiday helped reduced sales last month (Reuters).

BANKING & FINANCE

BTG Pactual, the investment bank controlled by Brazilian billionaire André Esteves, filed plans to sell shares in what is likely to be the country’s most coveted initial public offering this year (Reuters).

Locamerica, Brazilian car rental company, and its shareholders plan to sell shares in an offering, according to a securities filing. The company seeks to raise at least 200 million reais ($118 million) from the sale of new stock in a so-called primary offering (Reuters).

Banco do Brasil tapped its BB-rated Basel III-compliant perp, adding an additional USD750m to the already outstanding USD1bn. The new deal priced at 108.50 to yield 8.488%, which slashed 76bp off its original 9.25% yield. Overall it was a deft feat (Reuters).

The BNDES posted a net profit of R$ 9 billion in 2011. Gross earnings (before taxes and administrative costs) were influenced by the good performance of the credit and variable-income portfolios, which contributed 94% to profit. The treasury portfolio also had a positive impact, accounting for 6% of the Bank’s result in the year (BNDES).

BM&FBOVESPA in February obtained record average daily financial and trading volumes. The average daily financial volume was BRL 8,282.37 million, surpassing the previous record of BRL 7,777.83 million of October 2010. Average daily trading volume was a record 800,606 in February, surpassing the previous record of 705,855 of August 2011 (BM&F Bovespa).

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BIOFUELS

Brazil’s government announced an aggressive plan to raise flagging ethanol output over the next four years by showering the sector with 65 billion reais ($38 billion) in subsidized credit. The government will allocate funds via banks to mills and independent growers for the expansion and replanting of older cane whose yields have fallen. Credit will also be available to build up ethanol stockpiles (Reuters).

Brazil’s largest exporter of sugar and ethanol, Cosan, said it was buying Comma Oil and Chemicals, an automobile lubricants and additives company in Kent, England, from Exxon Mobil Corp Esso Petroleum Co (Reuters).

ENERGY

Brazil’s government is considering intervening in debt-ridden electricity distributor Celpa, a unit of Grupo Rede Energia, two senior government sources told Reuters, suggesting that the company’s financial woes will probably worsen.

State-controlled power holding company Eletrobras could help bail out debt-laden rival Grupo Rede Energia if requested by the federal government, Chief Executive José da Costa Carvalho Neto said (Reuters).

CPFL Energia, one of Brazil’s largest non-government electricity generation and distribution utilities, said it agreed to pay 1.06 billion reais ($620 million) for Bons Ventos Geradora de Energia, a Brazilian wind-power company (Reuters).

From a plateau created by a rock cut made in 1984, when Brazil first started construction on the 1,405-MW Angra 3 nuclear powerplant unit, there is a commanding view of the jobsite where work has now resumed after more than a two-decade lapse. Angra 3, built using the pressurized-water-reactor design, now is set to operate in 2015 at a cost of about $5.6 billion. It will join two other smaller units, Angra 1 and 2, that were completed decades ago (Engineering News).

MINING & STEEL

Brazilian mining output should rise 5 to 8 percent in value in 2012 and again in 2013, pushed by rising production volumes rather than higher metals and mineral prices, an official at the country’s mining industry association Ibram told Reuters.

The future of one of steelmaker CSN’s most cherished assets and $9.4 billion in mining and steel investments is in the hands of nine small-town lawmakers in southeastern Brazil. Many citizens of the rural town of Congonhas, population 50,000, want to limit iron ore extraction in its surrounding hills to protect its Baroque architectural heritage and its water supply (Reuters).

Brazilian iron ore startup Ferrous Resources, which hopes to become the world’s No. 4 iron-ore exporter by 2014, may resume plans to sell shares on the Sao Paulo stock exchange if it fails to find a strategic partner, a local newspaper said (Reuters).

Vale SA and the Brazilian government are close to an agreement on a dispute over unpaid royalty payments that may reach 7 billion reais ($4.09 billion), Mines and Energy Minister Edison Lobao said (Bloomberg).

Olacyr de Moraes, once the world’s largest soybean producer and known as ’Soybean King’ in the 1980s, is in talks with three foreign business groups to form a thallium mining venture in the country, Valor Economico reported (Bloomberg).

OIL & GAS

A federal judge in Brazil declined to grant an injunction suspending the Brazilian operations of oil major Chevron and offshore oil-rig contractor Transocean over a November oil spill northeast of Rio de Janeiro, providing temporary relief to the two companies (Reuters).

Spain’s Repsol and China’s Sinopec have made an oil discovery offshore Brazil that could be one of the biggest so far in the area (Reuters).

PORTS & LOGISTICS

Brazil’s impaired TGG soy and corn loading terminal at Santos is so far not having an impact on ship waiting times to carry grains from Brazilian ports to international markets, traders and vessel line-up data showed (Reuters).

Cargo transportation in Brazil is not cheap. Despite the existence of many navigable rivers and a large space to construct, or improve the railway network, the country still insists on working with a very expensive logistic system (The Brazil Business).

TELECOMS

Telefonica SA, Spain’s largest telephone company, plans to bid for airwaves in Brazil and Chile this year for building faster networks as it prepares for a boom in demand for mobile data in Latin America (Bloomberg).

 

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