Brazil awarded Investment Rating BBB

[michaelbush]

Originally Posted by FCZ

At New York Times:

http://www.nytimes.com/2008/05/24/bu...ewanted=1&_r=1

Good find Fernando!! I just had info that Warren Buffet invested in Brazil Reais a couple of years ago. Then the rate was 2.46 - now 1.654!! Not bad profit. I wonder if he has cut and run now.

[FCZ]

It's good material, and it seems that it is the beginning of a series of news from Brazil; and the CNBC video journalist is cute too .

Warren Buffet is a clever man, no doubt on that.

P.S.: "models that demonstrate that monopolistic pricing is anti productive", "FX Options", "FDI in Brazil and S&P ratings", and so on. Where you guys come from!? Where is my book...

[FCZ]

The Central Bank just released some news regarding the Balance of Payments for April (Banco Central do Brasil the English version + the detailed data should be available within a couple of weeks. Everything is ok; transaction accounts shows deficit, but it is offset by the capital account net inflows. FDI for April shows net positive balance of 3.9 billion dollars, net positive result for stocks and bonds are, respectively, 5.9 billion dollars and 230 million dollars. International reserves of 195.8 billion dollars. What may be of interest of this forum is that, in April, expenses of Brazil residents traveling abroad increased by 67.9% while non-residents traveling to Brazil increased by 13% (despite Real appreciation & low season, I would add). Naturally, the Central Bank data doesn’t show where these non-residents where traveling in Brazil, or what they were doing, but moneywise, it shows an increase. And that despite the rough times that several airlines are going through (routes cancellation, oil barrel at US$130,…). Now draw your conclusions…

[Dotty]

Hi there,

Having just read your article and being a Brasilian resident that travels abroad anually I think that the figures are slightly wrong.The cost of travel for a Brasilian resident within Brasil and overseas has actually decreased by quite a large percentage and not increased.It has increased for the overseas traveller because of the weak pound and dollar .Can you clarify clearly what you mean by increasing in 67% and not merely figures and within what area.

Originally Posted by FCZ

The Central Bank just released some news regarding the Balance of Payments for April (Banco Central do Brasil the English version + the detailed data should be available within a couple of weeks. Everything is ok; transaction accounts shows deficit, but it is offset by the capital account net inflows. FDI for April shows net positive balance of 3.9 billion dollars, net positive result for stocks and bonds are, respectively, 5.9 billion dollars and 230 million dollars. International reserves of 195.8 billion dollars. What may be of interest of this forum is that, in April, expenses of Brazil residents traveling abroad increased by 67.9% while non-residents traveling to Brazil increased by 13% (despite Real appreciation & low season, I would add). Naturally, the Central Bank data doesn’t show where these non-residents where traveling in Brazil, or what they were doing, but moneywise, it shows an increase. And that despite the rough times that several airlines are going through (routes cancellation, oil barrel at US$130,…). Now draw your conclusions…

[FCZ]

Originally Posted by Dotty

Hi there,

Having just read your article and being a Brasilian resident that travels abroad anually I think that the figures are slightly wrong.The cost of travel for a Brasilian resident within Brasil and overseas has actually decreased by quite a large percentage and not increased.It has increased for the overseas traveller because of the weak pound and dollar .Can you clarify clearly what you mean by increasing in 67% and not merely figures and within what area.

Sorry if the post wasn’t clear. These are aggregate numbers, inclusive of use of international credit cards. For instance, for the 13% increase on total expenses of non-residents traveling to Brazil in April, it may be caused by an increase of dollars expended by a small number of travelers, by a simple increase of the number of travelers to Brazil, or something in between. Due to the conditions mentioned in my previous post, it is indeed a positive number. What these numbers don’t tell is if these travelers are businessmen or tourists (either way is good) and where they are going to. Air traffic numbers, as was posted here before for some others, holds clues on this issue.

[JMBroad]

Basically it is supportive of the theory (while not serving as absolute confirmation) that although less international travellers are coming to Brazil, those that are coming are spending more money during their trip.

This is good for the real estate market because it may indicate that we are moving away from the all inclusive package deal traveller and towards the second residency tourist who is more likely to purchase a house and spend money on the local economy rather than go for the all paid for hotel stay

[Dotty]

That is true ,but where are the tourists ?Also as prices have increased in Brasil would that not show a growth of tourist expenditure in Brasil and not a decrease?

I would also like to mention that borrowing and buying is the simplest thing to do in Brasil.You select what you want to buy,negotiations are easily made and deal done.A Brasilian only needs to make an offer and thats it!No need to show proof of a steady income (unless you need to borrow from a bank),so the future problems will be when the over borrowing hits home and all the debts remain unpaid . So it may look like flowers are blooming in Brasil,but the truth is that only time will tell.QUOTE=JMBroad;54840]Basically it is supportive of the theory (while not serving as absolute confirmation) that although less international travellers are coming to Brazil, those that are coming are spending more money during their trip.

This is good for the real estate market because it may indicate that we are moving away from the all inclusive package deal traveller and towards the second residency tourist who is more likely to purchase a house and spend money on the local economy rather than go for the all paid for hotel stay[/QUOTE]

[FCZ]

As some of you may know, yesterday Brazil was upgraded to investment grade by DBRS (http://www.dbrs.com/intnlweb/jsp/content/document.faces). I would say that this agency is the fourth one in importance (subjective opinion), below S&P, Moody's, and Fitch. Now is missing the upgrades from the second and third ones. Stocks from properties dealings companies are doing well.

What should I say, specially considering what is going on in the world economy ...

P.S.: BBB- is better (investment grade) than BB+ (speculative) in a rating scale.
P.P.S.: Game is not over, still plenty to do in all fronts, but I don't remember that Brazil ever got investment grade before.

[FCZ]

Fitch just upgraded Brazil to investment grade.

What is next? Government expenditures reductions combined with tax cuts? Well, not that optimist; easier to see an alien spaceship than this happen any time soon.

[robh]

Once they are all upgraded, you will see the pension funds, government funds, etc. putting a lot more of their money into Brazil.