Brazil banks need better handle on consumer credit
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Raul Gallegos
NEW YORK, Sept 18 (Reuters Breakingviews) – Brazilian banks need a better handle on consumer credit. The liquidation, announced this week, of midsize lender Banco Cruzeiro do Sul stems from fraud, but it specialized in loans to Brazil’s burgeoning middle class. That group has grown so fast that the credit record is about as short as it was for U.S. subprime mortgages in 2008. The comparison is extreme, but it suggests Brazil’s banks need both good data and a cautious approach to lending.
Chavez’s cash pump PDVSA runs on empty
By Raul Gallegos The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Hugo Chavez’s cash pump, Petroleos de Venezuela, is running on empty. Venezuela’s troubled state oil group may now pay its suppliers with IOUs instead of cash. That’s hardly surprising given Chavez’s systematic squeezing of PDVSA to finance social spending, particularly ahead of elections set for Oct. 7. Harder to imagine is what happens when oil prices decline from today’s lofty heights.
PDVSA is a lesson in oil wealth mismanagement. Last year the company posted $125 billion in sales. More than 40 percent of that fed Chavez’s spending machine. Roughly $24 billion fattened state coffers in the form of royalties, taxes and dividends. And $30 billion lined Chavez’s discretionary spending funds. After covering production and financing costs, PDVSA had to borrow $9.5 billion and tap its $6 billion cash holdings to help fund investments. Despite generally rising crude prices, PDVSA has seen negative free cash flow for the last five years.
Murdoch banks on U.S. Latinos going all-American
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Raul Gallegos
NEW YORK, Aug 14 (Reuters Breakingviews) – Rupert Murdoch is banking on U.S. Latinos going all-American. News Corp’s (NWSA.O: Quote, Profile, Research) new MundoFox, a Spanish-language joint venture with Colombia’s RCN Television TRR.CN, should have little trouble piquing the interest of America’s fastest-growing minority with the Latin American country’s television soap operas. Throwing in U.S.-style programs is the novelty – and could define how much market share News Corp can grab.
Brazil’s Chevron ban straddles worst of two worlds
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
NEW YORK, Aug 2 (Reuters Breakingviews) – Brazil’s Chevron (CVX.N: Quote, Profile, Research) ban straddles the worst of two worlds. Suspending the U.S. oil giant’s local operations, and those of Transocean (RIG.N: Quote, Profile, Research), over a minor spill keeps Latin America’s biggest economy aligned with the likes of Argentina and Venezuela. Such meddling won’t help Brazil revive flagging growth. At the same time, the prosecutorial zeal involved with the case apes bad practice from the developed world.
Brazil’s bank giants put prudence before politics
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)(Adds related columns.)
NEW YORK, July 24 (Reuters Breakingviews) – Brazil’s bank giants are putting prudence before politics. Itau (ITUB4.SA: Quote, Profile, Research) and Bradesco (BBDC4.SA: Quote, Profile, Research) are slowing consumer lending as loan defaults climb. The move runs counter to the wishes of President Dilma Rousseff, who is pressuring the nation’s banks to lend more at rock-bottom rates. But with consumers and the broader economy under pressure, a dose of financial conservatism is welcome.
Chevron doubles down on Chavez staying power
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
NEW YORK, July 20 (Reuters Breakingviews) – Chevron (CVX.N: Quote, Profile, Research) is doubling down on the staying power of Hugo Chavez. Venezuela’s bond yields have gyrated with investors’ changing views of the strongman’s cancer survival odds. But the U.S. oil major’s $2 billion loan to state oil giant PDVSA [PDVSA.UL] is a clear bet on Chavez’s re-election and survival. His shadow may darken the nation’s economic outlook for a while yet.
Ousted Vale CEO returns unshackled by the state
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
NEW YORK, July 13 (Reuters Breakingviews) – The ousted chief executive of Vale (VALE5.SA: Quote, Profile, Research)(VALE.N: Quote, Profile, Research) is back on the scene. Roger Agnelli was deposed from the Brazilian mining giant last year after resisting President Dilma Rousseff’s meddling. Partnered with billionaire banker André Esteves, he is returning to invest in iron ore and metals. It’s a chance to show he can outperform Brasilia.
Brazil’s richest man overpromises, underdelivers
By Raul Gallegos
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Brazilian billionaire Eike Batista is swiftly falling from favor. His flagship oil company OGX lost 25 percent of its value Wednesday after massively cutting the output expectations of some key oil wells. Batista is a savvy salesman and wheeler-dealer but his failed promises are building up rapidly. Investors smartly no longer take him at face value.
Pemex can’t shake stigma of state-run cheapskate
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
NEW YORK, June 20 (Reuters Breakingviews) – Pemex [PEMX.UL] can’t shake off the stigma of being a state-run cheapskate. Mexico’s only oil company is trying to improve production after it declined by a quarter since 2004. But a second oil field auction aimed at luring in foreign players has just ended as disappointingly as the first. Meanwhile, investors lapped up the firm’s $1.75 billion sale of 32-year debt. The contrast shows how potential partners still have little faith that Pemex can be more than a cash cow for creditors and its government owner.
World’s new air giant taking off at turbulent time
By Raul Gallegos The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Get ready for the world’s largest airline to take off this week. But don’t look north or east – the globe’s most valuable carrier is set to be South American. Chile’s LAN Airlines is on track to finally consummate its marriage to Brazilian rival TAM this Friday, almost two years after announcing the tie-up. But the promise of greater regional integration has fueled big expectations that economic headwinds will make difficult to meet.
Investors eager to buy into a promising Latin America growth story have pushed TAM shares up by more than a third since the deal hit in August 2010. That values the firm at $3.6 billion – a pricey bump for LAN, whose shares have risen by just 10 percent. But at $12.5 billion the combined airline will be worth almost double Ryanair, 50 percent more than Delta and around 15 percent more than Air China.
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