Thursday, 22 January 2009

Reactions to the Selic's 100 Basis Point Cut in Brazil

Estado (click here for link): The largest banks in Brazil will proceed to cut their lending rates following the reduction on the Selic to 12.75 percent. And, for the first time in five years, companies and workers lauded the Copom's decision -- which wasn't unanimous (click here for the link.)

Reuters (click here for link): This is not necessarily linked to yesterday's Selic news, but the cut will help spark a revival in stock and bond offerings in Brazil. Anbid's Alberto Kiraly told Reuters in an interveiw that bond offerings will thrive in 2009 as investors slowly ''regain their appetite for risk and companies become more willing to borrow as benchmark interest rates fall.´´ Anbid reported at the end of last year that issuance of debt and new stock plunged 31 percent last year, ´partly as the result of the global credit crisis. Factors such as a central bank decision to increase reserve requirements on money raised from the sale of bonds issued by leasing companies helped to slow activity in domestic debt capital markets (DCM.)

Folha (click here for link): Unions expected a bigger reduction in the Selic. Clearly, they are trying to win more clout to block plans by industry lobbies to press the government for an ease in labour prerogatives for formal workers. Union leaders wanted to be credited for having pushed the central bank to cut the Selic more than the 0.75 basis points expected by most analysts. Well ...

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