• Home
• it.unipi.di.acube
• bat-framework
• 1.3
• source code
• yn_08Oct08_file_80

×

Project download

Many resources are needed to download a project. Please understand that we have to compensate our server costs. Thank you in advance.
Project price only 1 $

You can buy this project and download/modify it how often you want.

datasets.iitb.crawledDocs.yn_08Oct08_file_80 Maven / Gradle / Ivy

    Updated: New York , Oct 08 06:44 London , Oct 08 11:44 Tokyo , Oct 08 19:44 RESOURCES Brazil Scraps Bond Sale as Real Sinks to Two-Year Low (Update4) By Adriana Brasileiro and Andre Soliani Oct. 7 (Bloomberg) -- Brazil canceled a local bond sale for the first time in seven months, a sign the global credit crisis is beginning to squeeze the finances of Latin American countries. The Treasury shelved an auction of inflation-linked bonds, known as NTN-Bs, as a tumble in the currency throttled demand for local assets. The real sank as much as 5.8 percent today to a two-year low of 2.3125 per dollar. ``We are in the middle of a crisis of confidence that's everywhere and is affecting everyone,'' said , chief economist at Itau Asset Management in Sao Paulo. Brazil joins a growing list of issuers that are pulling debt sales as the seizure in credit markets drives up yields. Japan, Indonesia and Massachusetts all said today they were cancelling sales. In Brazil, car-rental company Localiza Rent a Car SA withdrew a request with authorities yesterday to issue debt in the local market. Brazilian President stepped up efforts yesterday to contain the fallout from the crisis in Latin America's biggest economy. Lula authorized the central bank to buy loans from cash-strapped lenders and to use foreign reserves to lend dollars to Brazilian banks abroad. The real has slumped 17.6 percent this month, the worst performance among all currencies tracked by Bloomberg, and has plunged 32 percent from a nine-year high reached Aug. 1. Five Months of Cash The real was down 5.7 percent today to 2.311 per dollar at 5 p.m. New York time. It has plunged 11.6 percent this week, the biggest two-day drop since Brazil abandoned a currency peg in January 1999. The central bank pumped $700 million into the currency market today to stem the slide. Today's bond sale cancellation was the first since March, when yields surged after the government imposed a tax on foreigners' local debt purchases. The Treasury planned on selling inflation-linked debt today with maturities ranging from 2011 to 2045. It didn't say how much it planned to sell. In the previous auction on Sept. 23, the government sold 1.45 billion reais of the securities. Yields have climbed since the credit crisis began. The yield on the 6 percent inflation-linked bonds maturing in 2011 has risen 1.02 percentage points to 9.89 percent from 8.87 percent on Sept. 12, according to Banco Votorantim. The yield rose 25 basis points, or 0.25 percentage point, today from 9.64 percent yesterday. The government may re-schedule the bond sale for as soon as this week, a Treasury spokeswoman said. The Treasury always has enough cash on hand to cover up to five months of debt maturities, the spokeswoman said. Stocks Plunge The benchmark stock index dropped 4.7 percent today to the lowest in almost two years after tumbling 5.4 percent yesterday. Officials halted trading twice yesterday as the Bovespa sank as much as 15.5 percent before paring losses. The index has shed 45 percent from a record high reached on May 20. Central bank President Henrique Meirelles said yesterday that the bank will also use reserves to finance exports and will accept foreign assets in currency-swap contract auctions aimed at stemming the real's declines. The government will provide the state development bank with an additional 5 billion reais to finance trade. The measures will ``allay the crisis in the medium term,'' said , Banco WestLB do Brasil's chief economist in Sao Paulo. ``In the short term, the markets will still be volatile because the confidence problem won't be over instantly.'' Last week the central bank eased rules on bank reserve requirements for a second time in as many weeks to make more cash available in the financial system. `Liquidity Problem' Finance Minister said yesterday the global financial crisis is probably at its peak now and will ease after European banks clean up their balance sheets. He said Brazilian banks don't have any ``bad assets'' and are ``solid.'' ``Brazil doesn't have a solvency issue,'' Mantega said. ``It's just facing a liquidity problem.'' The government projects in its budget that economic growth will slow next year to 4.5 percent from a range of 5 percent to 5.5 percent in 2008. Morgan Stanley yesterday cut its forecast for Brazilian growth next year to 2 percent from 3 percent. Brazil has amassed $207 billion of international reserves, the result of a six-year commodities rally that has sent the country's exports to a record high. The tumble in commodities, which account for about two-third of Brazil's exports, in the past three months has added to the rout in the currency and stocks. `Don't Be Afraid' Lula's authorization of the central bank to buy bank loans and lend dollars to banks abroad is a preventive move that authorities see no need to use now, Meirelles said yesterday. Lula told Brazilians today not to be afraid of the global crisis and urged them to keep spending because the local economy will continue to grow. ``Brazilians should continue doing what they're doing,'' Lula said in a speech in Angra dos Reis, a city along the country's Atlantic Coast. ``Don't be afraid. You must have certainty that we have found our destiny.'' To contact the reporter on this story: in Rio de Janeiro at Last Updated: October 7, 2008 17:17 EDT Related Video and Graphics More News | | | | | | | | | | | | | |