Brazil minister says it’s ‘impossible’ to put value on Eletrobras privatization


FILE PHOTO: Brazil’s Energy Minister Bento Albuquerque attends a news coneference in Rio de Janeiro, Brazil, October 10, 2019. REUTERS/Ian Cheibub

RIO DE JANEIRO (Reuters) – Brazil’s mines and energy minister said on Monday it is “impossible” to say how much the privatization of state-run power company Eletrobras SA ELECT6.SA will raise, despite an earlier government estimate of 16.2 billion reais ($3.84 billion).

Bento Albuquerque declined to provide an estimate of how much Eletrobras is worth, adding the market must wait for the privatization, expected to occur in the second half of 2020.

Last week, a source with knowledge of the deal told Reuters the government miscalculated in its 2020 budget how much it expects to raise from Eletrobras’ privatization.

Albuquerque said he expects Congress to speed up voting on N Eletrobras privatization bill after discussions with the Senate were opened last week.

Reporting by Rodrigo Viga Gaier; Writing by Gabriela Mello; Editing by Steve Orlofsky



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Brazil Is ‘100% Confident’ of U.S. Removing Fresh-Beef Ban By Bloomberg


© Reuters. Brazil Is ‘100% Confident’ of U.S. Removing Fresh-Beef Ban

(Bloomberg) — The U.S. reopening its market to Brazilian fresh beef is a matter of when, not if, according to government officials from the South American nation.

“We are 100% confident that it will happen — the thing we don’t know is when,” Orlando Ribeiro, trade and foreign relations secretary at Brazil’s agriculture ministry, said in an interview Thursday in New York. “Our meat has the necessary quality to be exported to the U.S. Quality is not an issue.”

No date has been set for when the U.S. will begin accepting imports, said Agriculture Minister Tereza Cristina. Brazil has provided additional responses to the U.S. and is now awaiting its analysis of the answers, the minister said.

In October, the U.S. informed Brazil that it would maintain a ban on fresh-beef imports from Latin America’s largest economy. The U.S. suspended imports in 2017 after finding meat containing blood clots and lymph nodes. Brazil said the findings were abscesses stemming from a reaction to components of a foot-and-mouth disease vaccine. After the episode, the South American nation reduced the vaccine dose and changed the product’s compound.

Meanwhile, Brazil expects China to issue export permits to more Brazilian meat processing plants, Cristina said. Since September, China has cleared 38 Brazilian plants — including poultry, pork and beef — to sell into the Asian nation as it grapples with a protein shortage caused by African swine fever, she said.

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Brazil Amazon deforestation soars to 11-year high under Bolsonaro By Reuters


© Reuters. An aerial view of a tract of Amazon jungle after it was cleared by farmers in Itaituba

By Marcelo Teixeira

SAO JOSE DOS CAMPOS, Brazil (Reuters) – Deforestation in Brazil’s Amazon (NASDAQ:) rainforest rose to its highest in over a decade this year, government data on Monday showed, confirming a sharp increase under the leadership of right-wing President Jair Bolsonaro.

The data from Brazil’s INPE space research agency, which showed deforestation soaring 29.5% to 9,762 square kilometers for the 12 months through July 2019, sparked an uncharacteristic admission by the government that something needed to be done to stem the tide.

It was the worst level of deforestation since 2008, heaping further pressure on the environmental policy of Bolsonaro who favors developing the Amazon region economically.

The Amazon is the world’s largest tropical rainforest and is considered key to the fight against climate change because of the vast amounts of carbon dioxide it absorbs.

Risks to the forest drew global concern in August when fires raged through the Amazon, drawing sharp criticism from France’s President Emmanuel Macron.

At a briefing to discuss the numbers, Environment Minister Ricardo Salles said the rise in deforestation showed the need for a new strategy to combat the illegal logging, mining and land grabbing which he said were to blame.

Environmentalists and nongovernmental organizations placed the blame squarely on the government, saying that Bolsonaro’s strong pro-development rhetoric and policies to weaken environmental enforcement are behind the rise in illegal activity.

“The Bolsonaro government is responsible for every inch of forest destroyed. This government today is the worst enemy of the Amazon,” said Marcio Astrini, public policy coordinator for Greenpeace, in a statement.

Bolsonaro’s office directed Reuters to remarks made by Salles and another official and did not comment further on the issue.

In August, Reuters reported Bolsonaro’s government had systematically weakened environmental agency Ibama, grounding a team of elite enforcement commandos and forbidding agents from destroying machinery used to illegally deforest.

Brazil’s Climate Observatory, a network of nongovernmental organizations, said the 2019 increase in deforestation was the fastest in percentage terms since the 1990s and the third fastest of all-time.

In response to the numbers, Salles vowed to roll out a series of measures to counter the rising deforestation, including stepping up enforcement efforts assisted by high-resolution satellite imaging.

The minister said he would meet governors of Amazon states on Wednesday to discuss tactics to counter deforestation.

All options are on the table, according to Salles, including mobilizing the military for use in environmental enforcement operations.

GOVERNMENT REVERSAL

Salles’ recognition that deforestation is indeed on the rise comes after months of the government casting doubt on preliminary monthly data showing destruction was skyrocketing.

At multiple press briefings earlier this year, Salles alleged the monthly data was unreliable and contained inconsistencies. He had urged journalists not to report the monthly figures and wait for the annual data, announced Monday.

Bolsonaro had accused the INPE space research agency of lying about the monthly data. In a high-profile dispute, then-INPE chief Ricardo Galvao stood by the data and called Bolsonaro “a joke of a 14-year-old boy that is not suitable for a president of Brazil.” Galvao was later fired.

The annual figure accounts for seven months under Bolsonaro, but also measures five months under the previous government.

It also does not account for destruction after July. Preliminary data for August to October shows deforestation more than doubled compared to the same period a year-prior to 3,704 square kilometers.

NGOs say they fear that protections could be weakened further as the government considers allowing commercial agriculture on native reserves, expanding wildcat mining and allowing for illegally occupied land to be “regularized.”

Beef prices are also at record highs in Brazil, leading some environmentalists to fear it could fuel land grabbing for cattle ranching – one of the biggest drivers of deforestation.

“The coming years could be even worse,” said Carlos Rittl, executive-secretary for Climate Observatory.

(Graphic: Deforestation in Brazil’s Amazon rainforest, https://fingfx.thomsonreuters.com/gfx/editorcharts/BRAZIL-DEFORESTATION/0H001QXK09G0/index.html)



Big Oil stuns Brazil in back-to-back auction flops


RIO DE JANEIRO (Reuters) – Major global oil firms snubbed a second Brazilian oil auction in a row on Thursday, passing up promising offshore blocks and forcing officials to reconsider a bidding system that gives a privileged position to state-run Petroleo Brasileiro SA (PETR4.SA).

Brazil’s Energy Minister Bento Albuquerque speaks during Brazil’s government pre-salt offshore oil auction in Rio de Janeiro, Brazil November 7, 2019. REUTERS/Pilar Olivares

The only block awarded in Thursday’s bidding went to the Brazilian oil firm, known as Petrobras, and Chinese state firm CNODC, a unit of China National Petroleum Corp, who offered the minimum bid. Four other blocks received no bids.

The disappointing result, following a lack of foreign interest in an even bigger Wednesday round, was a wake-up call to those who expected this week to crown Brazil as uncontested champion of the Latin American oil industry.

Analysts have agreed in recent days that promising oil prospects in Brazil’s pre-salt area, where billions of barrels of oil are trapped under a layer of salt beneath the sea floor, are getting pricey even for oil majors with strong interest.

The deepwater blocks also require enormous long-term investments compared with alternatives such as shale fields.

“All majors are focused on capital discipline and value versus volume. They will not bid at any cost for pre-salt assets,” said Marcelo de Assis, head of Latin America upstream for consultancy IHS.

Brazil’s new right-wing government pledged market-friendly reforms and has worked to scale back the role of Petrobras in the energy industry so that better capitalized firms can tap its vast reserves.

After the meager auctions, officials suggested they needed to do even more, in particular scrapping the right of first refusal that Petrobras has to operate any fields in the so-called “pre-salt polygon.”

Decio Oddone, the head of Brazilian oil regulator ANP, said those special rights discouraged some rivals, adding that he was surprised at the results, as he expected at least three blocks to be awarded.

Petrobras itself failed to submit bids for two blocks where it had initially exercised its preferential rights.

Its only bid on Thursday was a minimum offer for the Aram block, with a signing bonus of 5 billion reais ($1.2 billion), along with China National Oil and Gas Exploration and Development Corp (CNODC), which took a 20% stake.

Brazilian Mines and Energy Minister Bento Albuquerque said “it does not seem to make sense” for Brazil to maintain the special Petrobras rights exclusively in the area. He said the government must learn a lesson from the auctions to get better results in the future.

“We understand from what the companies tell us that our areas continue to be very attractive and productive,” the minister said. Other officials backed up the sentiment, pointing to strong foreign demand in prior pre-salt rounds since 2017.

Brazil also failed on Wednesday to award two of four blocks in the nation’s most ambitious oil round ever, as steep signing fees and the dominance of Petrobras in the “transfer-of-rights” (TOR) area scared off oil majors.

“Brazil is competing with opportunities everywhere in the world,” said Assis, of IHS. “Brazil’s pre-salt assets are attractive, but up to a price.”

Reporting by Gram Slattery, Marianna Parraga and Marta Nogueira; Additional reporting by Rodrigo Viga Gaier and Roberto Samora; Editing by Brad Haynes, Marguerita Choy and Bernadette Baum



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Brazil court says could annul Vale acquisition of Ferrous Resources By Reuters


© Reuters. Brazil court says could annul Vale acquisition of Ferrous Resources

SAO PAULO (Reuters) – A federal court in Brazil said it could annul Vale SA’s acquisition of midsize iron ore miner Ferrous Resources until certain environmental compliance documents have been provided, giving the company 30 days to do so, according to a decision seen by Reuters on Wednesday.

Vale said in August that it had to temporarily halt operations at the Viga concentration plant of its newly-acquired Ferrous Resources do Brasil due to “inconsistency in the documents.” Vale representatives were not immediately available for comment.

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Brazil, United Arab Emirates sign deal to deepen trade ties By Reuters



BRASILIA (Reuters) – Brazil and the United Arab Emirates have agreed to expand trade between the two nations and foster investment fund partnerships in sectors such as agribusiness, infrastructure, energy and defense, according to a joint statement released on Sunday.

Brazilian President Jair Bolsonaro is in the UAE as part of a 10-day trip across Asia and the Middle East to attract investment to Brazil. He signed the accord with Sheikh Mohammed bin Zayed Al Nahyan, crown prince of Abu Dhabi.

“Both leaders underscored the excellent economic cooperation between Brazil and the United Arab Emirates and expressed their determination to strengthen it further,” the statement said, adding that they also signed accords in the fields of artificial intelligence, the environment, defense, trade and customs.

According to the Dubai Chamber of Commerce and Industry, bilateral UAE-Brazil trade last year was $2.7 billion. Fernando Luis Lemos Igreja, Brazil’s ambassador to the UAE, told the Emirates News Agency WAM this weekend that it will be higher this year, having reached $2 billion by August.

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China says willing to increase agricultural, industrial goods imports from Brazil By Reuters


© Reuters. Chinese President Xi Jinping and Brazilian President Jair Bolsonaro attend a welcoming ceremony in Beijing

BEIJING (Reuters) – China is willing to increase its imports of agricultural and industrial goods from Brazil in order to enhance bilateral trade, Chinese Vice Premier Hu Chunhua said on Friday.

Hu, at a seminar in Beijing, also said the two countries can deepen cooperation in areas such as infrastructure, according to a pool report.

China is Brazil’s biggest trading partner and largest source of foreign investment. Last year, bilateral trade rose to a record $100 billion.

Brazilian President Jair Bolsonaro, who was also at the seminar, is in China to mark the 45th anniversary of the establishment of diplomatic ties between the countries.

Brazil and China are part of BRICS, a grouping of major emerging economies that also includes Russia, India and South Africa. China has said BRICS countries must strengthen their unity, increase cooperation and uphold multilateralism.

“The world is facing serious challenges from unilateralism and protectionism, putting pressure on major economies as uncertainty and instability are on the rise,” Hu said.

“China and Brazil, as two major economies, should increase communication and cooperation to face these challenges and realize shared development.”

Brazil is hopeful China will authorize more local meat exporters before Chinese President Xi Jinping visits Brazil next month, as the South American country seeks to position itself as a major food exporter to the world’s most populous nation.

Discussions between a Brazilian delegation to China and local authorities this week also covered demand for Brazilian commodities like sugar, cotton and ethanol.

The two nations are still discussing “a protocol” for exporting Brazilian soy and cotton meal.

Brazil is China’s main soybean supplier but has struggled to increase trade in soymeal with the Asian country.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Benetton Unit Hires Banks for $408 Million Bond Sale in Brazil By Bloomberg



(Bloomberg) — Autopista Regis Bittencourt SA, a Brazilian toll road operator ultimately controlled by Italy’s Benetton family, has mandated three banks to sell as much as 1.7 billion reais ($408 million) of bonds in the local market.

Banco BTG Pactual SA, Banco Itau Unibanco Holding SA and Banco do Brasil SA have been selected by the Registro, Sao Paulo state-based company to handle a dual-tranche deal that will be offered before the end of October, according to people with knowledge of the matter, who asked not to be named as the plan isn’t public yet.

The company confirmed the hiring of the banks and the size of the deal in an email, but didn’t comment further on timing or other specifics. Itau and Banco do Brasil didn’t immediately respond to requests for comment while BTG declined to do so.

Regis Bittencourt, which owns a concession to operate 403 kilometers (250 miles) of a highway linking Sao Paulo with Curitiba until 2033, will look to sell a first tranche of 1 billion reais maturing in 2031 that will pay inflation (IPCA) plus margin and a second tranche of 700 million reais coming due in 2027 at the inter-banking rate per one day (CDI) plus a margin. Margins will be determined after a book building auction.

The company will use proceeds from the sale to refinance debt and for capital expenditures. Regis has 921 million reais in loans maturing in 2023 and 2024.

Record Nearly Secured

The banks have told Regis that the second tranche could price at around CDI plus 1.1%, two of the people said. Arteris SA, the holding company that controls the toll operator, did its homework in August after getting its ratings raised by S&P Global Ratings. Spain’s Abertis SA controls Arteris while financial services provider Brookfield Aylesbury SARL holds a minority stake.

Regis’ offering would come as Brazil’s local bond market is booming. Investors have been shifting to corporate bonds as rates on government debt fall to new lows. The decrease in government borrowing costs has propelled 134 billion reais of notes issued by companies so far this year, according to data compiled by Bloomberg.

A robust pipeline of debt deals in the works will add to what’s already been sold this year, setting up the Brazilian corporate bond market to easily surpass 2018’s record of 135 billion reais. At least another 5.3 billion reais in bonds issued by toll-road operators will come to market before December, according to the people.

Among those deals, Rota das Bandeiras plans to sell as much as 2.4 billion reais in mid-November, led mostly by BTG, with XP Investimentos SA and Banco ABC Brazil SA handling a quarter of the deal, according to a filing made last week. Ecorodovias Concessoes e Servicos SA intends to issue 230 million reais of bonds next month, according to an Oct. 1 board meeting filing. Meanwhile, two units of CCR SA have mandated Banco Bradesco SA to offer 1.7 billion reais of notes, the people said. CCR and Bradesco declined to comment.

The Benetton family operates more than 3,400 kilometers of toll motorway in Brazil. It controls Atlantia SpA, which completed its acquisition of Abertis in October of last year. Atlantia manages 14,000 kilometers of toll roads in Europe, the Americas and India, according to its website.

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Renova Energia CFO out after Light divestiture, failure to sell Brazil wind farms By Reuters


© Reuters. Renova Energia CFO out after Light divestiture, failure to sell Brazil wind farms

By Tatiana Bautzer and Gabriela Mello

SAO PAULO (Reuters) – The CFO of Brazilian renewable energy firm Renova Energia SA (SA:) resigned and a key shareholder gave up its stake after failed talks to sell heavily indebted wind farm projects.

Renova Chief Executive Officer Cristiano Corrêa de Barros will temporarily assume the responsibilities of outgoing Chief Financial Officer Claudio Ribeiro, the company said on Monday.

Separately on Monday, Renova shareholder Light SA (SA:) said it had sold its 17.17% stake in the firm to an investment fund for a symbolic value of 1 real.

The exits of Light and Ribeiro follow years of unsuccessful talks to sell Renova’s wind farm projects, which have racked up debt and raised concerns about their timely completion.

Negotiations to sell the projects to AES Tiete Energia SA (SA:), a subsidiary of AES Corp (N:), broke down last week after six months of discussions.

Renova has been trying to sell some of its wind projects for more than two years. Before AES, the company was in talks with Canada’s Brookfield Asset Management Inc (TO:), which ended with no agreement in July 2018.

BTG Pactual analysts said “construction related risks” seemed to be the reason for AES Tiete to walk away from the deal, citing meetings with executives.

The result is negative for Light and state-controlled power holding company Companhia Energetica de Minas Gerais (SA:) (Cemig), said the analysts led by BTG Pactual’s Joao Pimentel in a note to clients written before Light sold its stake.

Cemig had a debt exposure of 768 million reais ($186 million) to Renova. Light had 253 million reais. Analysts say that if no other buyer shows up, the only solution would be for Cemig and Light to step up and finish the projects.

But Light has signaled the intention of not taking over with the sale of the stake to a fund.

The projects owe 960 million reais ($233 million) to state development bank BNDES, analysts said.

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Brazil services activity shrinks in August, underscores sluggish economy By Reuters


Brazil services activity shrinks in August, underscores sluggish economy

By Jamie McGeever

BRASILIA (Reuters) – Brazil’s services sector activity fell in August more steeply than economists expected, official figures on Friday showed, providing another indication that the broader economic recovery remains sluggish and uneven.

The 0.2% fall from July and 1.4% decline from the same period a year ago follows other August data releases that show retail sales barely rose and the service sector purchasing managers index (PMI) slipped from July.

Services account for over 70% of Brazil’s economy, the largest in Latin America. It shrank 0.2% in the first quarter of the year but rebounded 0.4% in the second, raising hopes that growth would consolidate around that pace in the third quarter.

But the decline in services activity in August was greater than the 0.1% monthly decline and 1.0% year-on-year fall economists had expected, according to the median estimate in a Reuters poll of economists.

The monthly fall was the fifth out of eight this year, and the annual decline was the fourth, figures from government statistics agency IBGE show.

Service sector activity in the 12 months to August rose 0.6%, IBGE said, marking a slowdown from 0.7% in the year to June and 0.9% in the year to July. Year-to-date growth slowed to 0.5% from 0.8% in July.

Brazil’s economy is expected to grow by less than 1.0% this year, according to estimates from the government, central bank and most private sector economists. Low growth and weak inflation are likely to prompt further cuts in official interest rates to new lows this year.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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