Tag Archives: Brazil

U.K. Inflation to China Communist Party Plenary

According to Bloomberg,

Big Ben (Bloomberg)

Big Ben (Bloomberg)

Coming up in the global economy this week are readings on inflation in the U.K. and growth in the euro region, the third Communist Party plenary session in China and retail sales in Brazil. In the U.S., Janet Yellen’s confirmation hearing in her bid to become the next chairman of the Federal Reserve will take center stage.


— Bank of England Governor Mark Carney will make public the central bank’s quarterly inflation report on Nov. 13 as the economy shows signs of gathering steam.

— That may prompt policy makers to bring forward expectations of when unemployment will fall below 7 percent, which the BOE has set as a threshold for raising rates, according to economist Jonathan Loynes.

— “There must be a good chance that the unemployment forecast is reduced, not least because of what is likely to be a slightly stronger profile for GDP growth,” Loynes at Capital Economics Ltd. wrote in a Nov. 8 note to clients. “Such a shift so soon after the introduction of forward guidance could fuel expectations of further adjustments in the future, hence causing the markets to bring forward their rate-hike expectations again.”


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Hedge Fund’s Cancun Dream Explained in Junkiest Junk Deal

Hedge Fund’s Cancun Dream Explained in Junkiest Junk Deal

At a time when bond buyers are shunning junk, Hyatt Hotels Corp. (H) and Farallon Capital Management LLC are trying to drum up financing for 13 all-inclusive beach resorts from Cabo San Lucas to Cancun with Latin America’s riskiest debt in three years.

Playa Resorts Holding BV, a joint venture between Hyatt and the $19.2 billion San Francisco-based hedge fund, is planning to raise $300 million of seven-year bonds that Moody’s Investors Service rates Caa1, or seven levels below investment grade. If completed, the sale would be the first of such a low-rated corporate dollar bond in the region since now-defunct Brazilian meatpacker Independencia SA issued debt in 2010.

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Brazil Regulator Queries JBS on Use of Derivatives

Brazil Regulator Queries JBS on Use of Derivatives

Brazil’s securities regulator has expressed concerns about how JBSSA, JBSS3.BR -2.50% the world’s largest meatpacker by revenue, uses derivatives and has asked for an explanation.

JBS is by far the largest user of derivatives among nonfinancial companies in Brazil, the regulator, known as CVM, said in a letter sent to JBS last week and made public by the company late Tuesday. JBS makes “constant changes” in its derivatives operations, switching position in one direction or another, the CVM said.

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Can Brazil Start-Ups Succeed Despite Tough Short-Term Outlook?

The consensus among investors and entrepreneurs in Brazil is that the short term will be difficult, but that long-term prospects remain highly favorable.

The consensus among investors and entrepreneurs in Brazil is that the short term will be difficult, but that long-term prospects remain highly favorable.

Brazil’s Internet start-ups were once the darlings of emerging markets, attracting venture capitalists from around the world. But after two-plus years of growth, the sector is facing tougher times, reports Vinod Sreeharsha from NY Times.

Numerous young companies, even those with prominent investors, are struggling to show sustainable profitability despite early rapid growth in revenue. A case in point: Shoes4You, an e-commerce site selling designer footwear, decided to close down last month, despite being backed by the prominent United States investment firms Redpoint Ventures, Accel Partners and Flybridge Capital Partners.

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Private Equity Hunts for Brazil’s Next Big Oil Startup

4067738245_c300,200,100,50,100According to Bloomberg’s Peter Millard, Brazil’s plan to sell offshore oil licenses for the first time in six years is sending private- equity investors on a search for startups to compete with global producers including Royal Dutch Shell Plc (RDSA) and BP Plc. (BP/)

Denham Capital Management LP, the Boston-based energy investor overseeing $7.3 billion, is among funds in talks with startups before a government auction, said Victor Munoz, Denham’s head for Latin America. Ouro Preto Oleo & Gas, a Brazilian explorer financed by Rio de Janeiro-based fund Turim, is seeking to attract investors, said Dirceu Abrahao, the startup’s ventures director. Agua Grande Petroleo, backed by Toronto-based Forbes & Manhattan, is also looking for additional private funding, Chief Executive Officer Peter Boot said.

“We’re exploring opportunities,” Munoz said in an interview fromSao Paulo. “The life of an exploration company is access to more concessions.”

President Dilma Rousseff’s plan to auction 172 blocks in May means producers can expand in Brazilian waters, six years after the world’s largest oil discoveries since 2000 were made in a region that may hold more than 50 billion barrels of oil. The sale will attract private equity-backed ventures looking to replicate the success of Barra Energia Petroleo & Gas, the oil startup that owns 10 percent of one of the country’s biggest fields, KPMG adviser Manuel Fernandes said.

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Global Economy Growth Downgraded by IMF

As reported by Steve Schaefer in Forbes, the International Monetary Fund dialed back its outlook for the global economy Tuesday, and now projects worldwide growth of 4% in 2011 and 2012, down from 5% in 2010.

China Leaders Forum 2011, How American Companies can Plug Into The Chinese Rocket-Propelled Economy

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Some slowdown was anticipated, but the IMF expected it to come from an unwind of the unprecedented stimulus efforts launched to counteract the financial crisis over the last three years.  Instead, “a barrage of economic shocks in 2011 combined with other factors for a worse than anticipated outcome.”

Chief economist Olivier Blanchard warned that “strong policies are urgently needed to improve the outlook and to reduce the risks,” and the IMF said the economy is in “a dangerous new phase” marked by weaker activity and a sharp decline in confidence.

The associated issues will be discussed more in detail at  Golden Networking‘s China Leaders Forum 2011, October  7.

The updated forecast anticipates U.S. growth of just 1.5% in 2011 and 1.8% in 2012, with euro area growth of 1.6% this year falling to 1.1% next year. Emerging and developing economies will also grow slower than previously anticipated, but remain the workhorses of global growth, the IMF anticipates.  China is expected to grow at a better than 9% clip this year and next, while Brazil is expected to maintain annual growth better than 3.5%.

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China Bond Yields at Three-Year High Amid Resource Grab

As reported by Bloomberg News, the highest funding costs since 2008 may make it more expensive for  China’s state banks to lend to commodity producing nations, as the world’s fastest-growing major economy tries to secure natural resources to fuel growth.

China Leaders Forum 2011, How American Companies can Plug Into The Chinese Rocket-Propelled Economy

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Five-year borrowing costs for the so-called policy banks surged 70 basis points to 4.6 percent this year and touched a three-year high of 4.68 percent on Aug. 4,  China bond prices show. Top-rated Indian lenders pay 9.45 percent on their five- year debt, compared with 8.94 percent at the end of 2010, data compiled by Bloomberg show.

The government relies on  China Development Bank Corp. and Export-Import Bank of  China to lend to resource-rich nations such as Brazil, Kazakhstan and Venezuela in exchange for commodity and energy supplies. Borrowing costs surged after the central bank raisedinterest rates to control inflation and lenders increased provisions against loans for local governments. The value of banks’ dollar loans are falling as the yuan strengthened 3.3 percent against the currency in 2011.

The associated issues will be discussed more in detail at  Golden Networking‘s China Leaders Forum 2011, October  7.

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