Friday, 9 January 2009

Earlybird (Jan. 09, 2008)

News headlines for Jan. 9:

  • U.S. -- Labour Market Data Points to Deepening of Recession; Result May Spark Losses in Markets (Reuters): U.S. employers probably cut the most jobs in at least 34 years last month, according to a Reuters survey. The non-farm payrolls report for December, due later today, may show that 2008 produced the biggest job losses since WWII. Investors in Asia cautiously dumped shares and snapped government bonds -- mainly due to mounting concerns over the data results.
  • COLOMBIA -- Isagen Desperately Seeks for Investors for Dam Project (Portafolio): This is one of the many reasons why a country needs to have a development bank (obviously exempt from the typical vices of cronism and bureaucracy.) Colombian infrastructure projects might face a deart of funding unless there is an instance such as a lender of last resort. that secures money for companies participating in them. In that sense, the Brazilian BNDES, in spite of all its capital sins, is helping the government fund ongoing and future projects as private financing disappears.
  • COLOMBIA -- Government, Private TV Channels Reach Accord on License Extension (Tiempo) -- After days of legal uncertainty, the National TV Commission and the owners of two private channels agreed upon basic terms to extend the current concession for another 10 years. Along the entire process, the government position coundln't have been more detrimental to the most basic principles of business stability. Remember that, no matter the political orientation of any president, whether he/she comes from the right or the left, their real commitment to the country is to respect the rules of the game and ensure employment and judicial security to citizens. Uribe, whose platform is to reinforce security and encourage investment, had a slippage in this issue.
  • MARKETS -- Hedge Funds Posted Record Loss in 2008 (Bloomberg): Rich customers must be fumming. Hedge funds lost more than 18 percent last year. Investment losses and client withdrawals reduced industry assets to $1.1 trillion last month from its peak of $1.9 trillion in June.
  • BRAZIL -- Labour Minister Wants to Extend Job Stability in Layoff Cases (Estado): This is what you get from naming union leaders as cabinet ministers. The labour rights issue has become worthy of discussion in Brazil, and the sooner, the better. What the country needs is labour flexibilisation, not the opposite -- which is what politicians want. In the end Lupi is trying to do anything he can to prevent joblessness numbers from looking awful just as the electoral cycle (2010 election) is beginning to take shape.
  • BRAZIL -- Dollar Outflows in 2008 Was Biggest in 26 Years (Folha): Brazil's external accounts posted a deficit for the first time since 2002. But the dollar shortages seem to be easing at this point. The situation, some strategists say, will revert slowly during the first quarter.
  • ARGENTINA -- Real Estate Activity Declines 23 Percent in November (Nacion): Another indication that Argentina, as much as the presidential couple wanted to deny, is also suffering the imapct of the global crisis. The problem, I believe, is not that the number of real estate transactions drop, but that the value of homes tumble. Once the crisis translates into lower home values, then another means of savings is lost.
  • BRAZIL -- Petrobras to Tap Bond Markets Within Days (Bloomberg): I disagree. But it may be possible that they do. I think they will try first with loans, although the recent sale of bonds by the sovereign opened them space to raise funds in international bond markets.
  • MARKETS -- Morgan Stanley Recommends Yuan, Won, Peso Against Dollar (Bloomberg): Morgan Stanley recommended buying the Chinese yuan, the South Korean won and the Mexican peso as an easing in the global shortage of dollars causes the U.S. currency to weaken.
  • VENEZUELA -- Devaluation Won't Be Ruled Out, Says Finance Minister (Bloomberg): As the government refuses to slow fiscal spending, a devaluation is inevitable. The timing is the real question. Bets are open.

1 comment:

  1. Very hard to say how soon Petrobras will go to the market, on the other hand, as Claudia Schuffner points out in her clear-headed analysis piece, Petrobras is between a rock and a hard place. The political pressure is on to maintain spending at something around $22 billion a year and Dilma Rousseff, the head of the PAC, the government's centerpiece economic plan, is also the chairwoman of Petrobras.

    In a Brasil Energia pinge-ponge interview CFO Almir Barbassa, makes it clear that the company is in the market and in a tough market where you need money, you issue, or borrow when you can, not necessarily when you want to.

    There seems to be a window now and there are banks putting out feelers for a Petrobras bond offer in London. The Credit Suisse report on the company last week, with a positive but urgent tone, suggests that CS may be the leader behind the efforts.

    If they don't do a deal, it also doesn't mean they didn't try. With, at Barbassa's estimate they will need somewhat more than the $8.5 billion they borrowed last year plus another $3 billion of maturities, might be good to get all they can now. It's going to be a long and difficult year and even Barbassa doesn't know when the crisis will end.

    Added all together, that might not mean ``days'' but it does mean the sooner rather than later. There's also some money sitting around, and despite Brazil's semi-bungled sale (the bonds fell out of the gate) the chance of an ``Obama Bounce'' on or around Jan. 20 may whet people's appetites.

    You also have to consider all the pension funds, Calpers, Ontario Teachers and anybody with retirees to pay with their dwindling assets and Treasury yields going negative. If you can get 7% plus for an investment grade company essntially backed with oil and gasoline in the world's 9th or 10th largest economy, wouldn't you want a piece????

    I would and soon.