• Categories
  • Archives

Brazil’s Good Image Brings Foreign Capital

The surplus in the Brazilian trade balance and the primary surplus were fundamental for the success of Brazilian government issues last October 6 on the foreign market.

The Brazilian Central Bank issued US$ 1 billion in Brazilian foreign debt bonds, but the market showed interest in purchasing up to US$ 5 billion. This was the second issue in one month.


According to Global Invest Asset Management analyst Paulo Gomes, the high demand was due to the good international perception of the Brazilian economy, which has been taking place due to the export performance and to the result of government expenses.


The government issue should also open space for Brazilian companies to issue bonds and collect lower interest loans on the foreign market.


“The lower the country risk, the safer the company is considered,” stated Gomes.


Brazil’s long-term foreign currency sovereign credit rating is currently BB-, one level above the country rating at the beginning of the year, and only three levels below the rating of developed countries.


The good perception of the Brazilian economy generates a virtuous circle for the country, as it opens new doors for Brazilian companies to open new international lines of export credit, at lower cost and, consequently, providing them with even greater competitiveness on the foreign market.


The ease Brazil has in generating funds in dollars, due to the country trade balance surplus, has made it possible to pay lower interest rates.


The Wednesday issue, for example, is mature in 15 years, at interest rates of 9.2% a year.


In July, Brazil was paying as much as 10.8% interest on bonds issued with ten-year maturity. The greater the indicators that the country is going to pay its issues, the lower the interest rate.


“The trade balance result and the primary surplus (government revenues minus expenses before the payment of interest) are what have been giving the country greater credibility on the foreign market,” stated the Global Invest analyst.


This year, Brazil has already collected US$ 5 billion, despite the Brazilian Central Bank having forecasted just US$ 4.5 billion. Next year, international issues should total over US$ 6 billion.


This money goes straight into the country foreign currency reserves, with which the country pays its foreign debt and its interest. The volume of reserves is normally examined by investors before they decide to invest in the country.


The success of the Brazilian issues should also reduce the company need to renew its agreement with the International Monetary Fund (IMF), which expires in March.


“Brazil can decide not to renew the agreement,” stated Gomes. Brazilian reserves are currently at around US$ 25 billion.


Export


The international relations manager at the Federation of Industries of the State of São Paulo (Fiesp), Christian Lohbauer, believes that the improvement in Brazilian perception may further strengthen export, but he recalls other measures that must be taken so as to guarantee continuation of foreign trade growth, among them the reduction of taxes, the improvement of access to credit and investment in infrastructure.


Brazil has had a foreign trade surplus of US$ 25 billion between January and September this year. Up to the end of the year, the government forecasts a surplus of US$ 32 billion and export of around US$ 90 billion.


Last year, the country sold US$ 73 billion on the foreign market. Brazilian companies are returning to investing, moved by the good perspectives of foreign trade and by the growth of domestic consumption.


ANBA – Brazil-Arab News Agency

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Drags Latin America Up

Latin American markets rose, led by a surge in Brazilian equities to a record ...

No Business Like News Business

The Brazilian press was among the victims of a serial killer on the loose. ...

A Glimpse of Brazil’s Filmmaker Kogut in Los Angeles

The Beyond Film program at California’s Beyond Baroque Literary Arts Center will  host celebrated ...

Delays, Deaths and Preparations on FIFA’s Agenda for Brazil’s World Cup

All the trouble involving Brazil’s 2014 World Cup preparations and concerns about human rights ...

Brazilian Court’s Latest Decision: Amazon’s Belo Monte Dam Is Off

In the latest chapter of a decades-long dramatic battle between environmentalists and the government ...

WTO Hints Brazil and Friends Are Holding Hong Kong’s Meeting Hostage

The European trade commissioner, Peter Mandelson, said today, that everyone must leave Hong Kong ...

Brazil Calls US and Urges Immediate Cease-Fire in the Middle East

During talks this morning, July 20, with the US Secretary of State, Condoleezza Rice, ...

How Nestlí©’s Work Relations Have Soured in Brazil

The Nestlé plant in Araras, near São Paulo, is the biggest Nestlé plant in ...

Police Seize 7 Tons of Drugs at Brazil-Paraguay Border

In two days, the Brazilian Federal Police (PF) in the state of Paraná, South ...