Category Archives: Brazil

Odebrecht selling 55 percent stake in $5 billion natgas Peru pipeline

Odebrecht SA, the engineering company at the center of a massive graft probe in Brazil, is selling its 55 percent stake in a $5 billion natural gas pipeline project in Peru, the pipeline manager told Reuters on Friday.

David San Frutos said international creditors interested in financing $4.1 billion of the project had asked that it have no links to Odebrecht or the corruption probe in Brazil, known as “Operation Car Wash.”

Spanish utility Enagas SA, which now controls 25 percent of the project, is interested in buying 6 percent of Odebrecht’s stake, said San Frutos, who heads Enagas’ Peru unit.

“The remaining 49 percent will be acquired by another company or other companies” but must be approved by both Enagas and the project’s other junior partner Grana y Montero SAA, San Frutos said in an email.

Odebrecht Latinvest, the company’s investment unit for Latin America, said in a statement that it was evaluating proposals and declined further comment.

Enagas and Grana y Montero, which owns 20 percent in the pipeline concession, took over management of the project last month to distance it from the probe in neighboring Brazil, where the former head of Odebrecht has been convicted of bribery, money laundering and organized crime.

Odebrecht is selling billions in global assets, including a hydroelectric dam and a road concession in Peru, to raise capital as it grapples with rising debt in the wake of the corruption scandal, its chief executive told Brazilian newspaper Folha de S.Paulo in an interview published April 1.

Read the full article on Reuters.

Brazil’s Oi starts $14.3 billion bond restructuring talks

A woman stands next to the logo of Brazil’s largest fixed-line telecoms group Oi, inside a shop in Sao Paulo October 2, 2013.

Oi SA on Monday formally started talks to restructure $14.3 billion of bonds, pitting some of the world’s biggest investors against each other as Brazil’s most-indebted phone carrier fights for its survival.

In a securities filing, Oi said a group of bondholders that have Moelis & Co as their advisor signed a non-disclosure agreement to join talks. Reuters, citing sources, said the group of over 25 investment firms including BlackRock Inc, Citadel LLC and Pacific Investment Management Co, could sign the accord as early as Monday.

The decision to begin talks with the Moelis-advised group leaves unclear how, or whether, Oi will negotiate with other creditors such as hedge funds that have bought credit default swaps linked to Oi’s bonds. The carrier wants to negotiate with bondholders who “care about the company’s future,” one of those sources told Reuters.

At stake is the fate of Oi, the byproduct of a state-sponsored merger eight years ago and the only Brazilian carrier controlled by domestic capital. Shareholders see a restructuring facilitating a potential takeover of Oi, which they say could help narrow the gap with rivals controlled by Spain’s Telefónica SA and Mexican billionaire Carlos Slim’s América Móvil SAB

Read the full article on Reuters.

Brazil’s Vice President aims at more market-friendly policies

Brazil’s Vice President Michel Temer arrives at news conference in Brasilia, Brazil April 11, 2016.

The rebalancing of Brazil’s depleted public accounts would be done gradually and accompanied with policies that create jobs and raise income under a possible government of Vice President Michel Temer, his top economic adviser told Reuters on Wednesday.

Temer could become Brazil’s next leader in coming weeks as a growing number of disgruntled lawmakers move quickly to impeach leftist President Dilma Rousseff over accusations she broke budget laws.

Wellington Moreira Franco, a confidant of the vice president and coordinator of his party’s economic plan, said the biggest challenge of a Temer administration would be to shore up the country’s finances.

“That fiscal rebalancing will have to be accompanied with incentives to generate jobs and raise income,” said Franco in the offices of Temer’s Brazilian Democratic Movement Party (PMDB) in Congress. “It has to be a gradual adjustment … if not you risk suffocating the population.”

Read the full story on Reuters.

Brazil’s worsening crisis to drag on Latin America’s growth: IMF

A prolonged recession in Brazil fanned by political turmoil will drag on economic growth for the next two years in Latin America, a region already reeling from falling commodity prices, the International Monetary Fund said on Tuesday.

In its World Economic Outlook, the IMF revised its 2016 recession estimate for the region to 0.5 percent from 0.3 percent. It would be Latin America’s second straight year of contraction and the worst performance of any region – including the slow-recovering Euro area.

Although the IMF expects most of the region’s economies to pick up steam in 2017, growth will remain moderate given the impact of what could be Brazil’s worst recession in more than a century.

The Fund sees Latin America growing 1.5 percent in 2017.

The worsening political crisis that could oust leftist President Dilma Rousseff in the coming weeks has thrown Brazil further into chaos by slashing investment and consumer spending in what was until a few years ago an emerging success story.

Read the full story on Reuters.

Brazil’s Itaú eyeing Citigroup’s Latin America assets

Itaú Unibanco Holding SA is interested in assets that Citigroup Inc has put up for sale in Latin America, as Brazil’s largest bank by market value seeks opportunities to expand beyond its home turf, a senior executive said on Thursday.

Any assets that Itaú could analyze for potential purchase are outside Brazil, said Ricardo Villela Marino, senior vice president in charge of Latin American operations.

Marino, who is a member of one of the families that control the São Paulo-based bank, said the bank has not entered into negotiations for any of those assets.

“We’ll take a look at every unit they put up for sale” excluding Brazil, Marino told reporters on the sidelines of an event in São Paulo.

Itaú is aiming for its operations outside Brazil to account for almost 20 percent of its total revenue by the end of the decade, up from less than 15 percent now, as part of a strategy to diversify from the recession-stricken nation.

Read the full article on Reuters.

Brazil’s Odebrecht hopes to renegotiate $9.83 billion in debt

A sign of the Odebrecht SA construction conglomerate is pictured in Rio de Janeiro, Brazil, February 26, 2016. REUTERS/RICARDO MORAES

Odebrecht SA, Latin America’s largest engineering company, hopes to renegotiate as much as 35 billion reais ($9.83 billion) in debt with Brazilian banks in order to get through a financial crisis sparked by its involvement in the country’s biggest-ever graft probe, according to the Folha de S. Paulo newspaper.

The company, whose chief executive and grandson of its founder received a 19-year sentence from the court handling the probe last month, seeks an “ambitious” agreement with the banks to restructure its debts and free up liquidity, the paper said Saturday, without citing sources for its information.

Read the full article on Reuters.


Brazil’s Petrobras to axe 12,000 jobs

Brazil’s state-run oil producer, Petrobras, has said it will cut 12,000 jobs by 2020. The voluntary layoff programme will help save $9bn at the company, which has struggled with losses following a price-fixing and bribery scandal.

It has also been hit by the global slump in the price of oil.

Petrobras, which has reported losses for the last two financial years, is expected to spend $1.23bn on implementing the job cuts plan.

Petrobras has long been one of the biggest employers in Brazil, with more than 80,000 employees.

However, it has seen its business hit by the huge falls in oil prices globally and one of the biggest corruption scandals in the country’s history, which has gone to the heart of the country’s government.

The announcement that 12,000 jobs are to be cut over the next five years is part of a investment plan to turn around the company’s fortunes.

Read the full article on the BBC.

Brazil party set to abandon Rousseff, making impeachment more likely

Brazil’s President Dilma Rousseff arrives to a meeting with jurists at Planalto Palace in Brasilia, Brazil, March 22, 2016.

Brazil’s largest party will decide on Tuesday to break away from President Dilma Rousseff’s floundering coalition, party leaders said, sharply raising the odds that the country’s first woman president will be impeached amid a corruption scandal.

The fractious Brazilian Democratic Movement Party (PMDB) will decide at its national leadership meeting on the pace of disengagement from the Rousseff administration, in which it holds seven ministerial posts and the vice presidency.

Read the full article on Reuters.

Economists Reduce Brazil GDP Outlook For 2016 and 2017

Economists reduced once again their outlook on Brazil’s economic performance for this year and next year, underscoring a prolonged recession of Latin America’s largest economy.

Brazil’s gross domestic product is expected to shrink 3.66% this year, according to a weekly central-bank survey of 100 economists, compared with expectations a week ago for a 3.60% contraction. This marked the tenth-consecutive downward revision. For 2017, economists reduced their view of the country’s economy expansion to 0.35% from 0.44%.

Read the full article on NASDAQ.

Argentina Is Now More Politically Stable Than Brazil

Mauricio Macri, Argentina’s new president. Investment firm Schroders in London says Argentina is in much better shape than its rival Brazil. (Photo by Diego Levy/Bloomberg)

Argentina versus Brazil. It’s bigger than the Red Sox versus the Yankees. The Patriots versus, well, the NFL. ManU versus Arsenal. Who is better Pele or Maradona? If they represented a country’s government, then it’s Maradona today. With Cristina Kirchner no longer in power, businessman and new president Mauricio Macri now trumps Brazil’s president Dilma Rousseff. The market has decided that Argentina is better.

“We find greater reason for optimism there,” says Craig Botham, emerging markets economist at Schroders in London. He says that, oddly enough, Argentina is further along the “reform path” even though Macri just took over in January. “The new government has an ambitious and wide ranging reform platform, and a popular mandate to back it,” Botham says. “Progress has already been made on the issue of the bond holdouts, and the legislation received support across the (political) spectrum. Fiscal and inflation targets are next, and to us they strike the right balance between bold and credible. Officials are frank, but confident about the challenges they face.”

Read the full article at Forbes.