On August 10 2000, within the space of two hours, Brazil sold
$9.3 billion in stocks and bonds, mostly to foreign investors. This
represents the strongest sign yet that investors have regained
confidence in Brazil after last year's currency devaluation.
Of the total amount raised, Brazil gained $4.1 billion from the
sale of a 28% voting stake in state-owned oil company Petrobrás.
Two hours later, it sold $5.2 billion in 40-year bonds - its
longest maturity ever sold - in a swap for outstanding debt.
The stock and bond sales set several precedents. In addition to
the bond being the longest maturity sold by Brazil, the swap is the
biggest ever in emerging markets. The sale of Petrobrás stock is
the biggest sale of a non-controlling stake in a Latin American
company, according to the banks that managed the sales.
Brazil is winning back investors by shaving its bloated budget
deficit, driving it down to R47.5 billion ($26.5 billion) from over
R100 billion early last year. The deficit reduction has helped
shore up the currency, which has been little changed against the
dollar this year, after losing a third of its value last year.
Halting the currency's slide after the devaluation prevented an
inflation spiral and helped bring down domestic interest rates by
more than half, which is helping to fuel an economic recovery. The
economy, now entering its fourth quarter of expansion, is expected
to grow by at least 4% annually over the next three years.
After pumping an average of $2.3 billion a month of direct
investment into the country in the first half, investors poured in
$5.1 billion in July, the highest monthly total since the
devaluation, according to government's reports.
Brazilian GPD in the first half of 2000 surpasses
forecasts
Brazil's gross domestic product (GDP) grew by 3.84% in the first
half of this year compared to the same period during 1999 according
to the Brazilian Institute of Geography and Statistics, a
government-run research institute.
During this period GPD was boosted by expansions of 6.45%, 5%
and 2.96% in the agricultural, industrial and service sectors
respectively. The agricultural sector showed increases in farming
(up 6.49%), vegetable extraction (up 8.55%) and livestock
production (up 6.28%).
As for the industry sector, leading segments included
transformation (up 6.45%), mineral extraction (up 7.53%), public
utilities (up 5.48%), and construction (up 1.91%). In services, the
highlight was telecommunications with an expansion of 14.06%.
Bovespa and LSE enter into a co-operation
agreement
The São Paulo Stock Exchange (Bovespa), and the London Stock
Exchange (LSE) signed a co-operation agreement on August 7 2000, in
a move intended to boost equity trading in both markets.
According to this agreement, the bourses will exchange
information on assets traded both on Bovespa and the LSE, including
details such as trading suspension, regulations and trading volume.
Each stock exchange will be required to make available, at regular
times, data pertaining to the activity in their respective
markets.
The agreement was completed in London by Ian Salter, chairman of
the LSE, and Raimundo Magliano, Bovespa's vice-president. According
to Bovespa, it will take effect in the next few months.
Eliana Maria Filippozzi