Bloomberg News

Latin Day Ahead: Chile’s Central Bank May Slash Rate to 7.75%

January 08, 2009

Chile’s central bank may slash interest rates by the most in five years; Peru’s central bank will probably keep its benchmark lending rate at its highest level since 2001; Pimco says bonds sold by Brazil, South Korea, Mexico and Singapore are compelling because emerging markets will avoid a ”domino effect” of defaults; Corn, soybeans and wheat fell for a second day after crude oil tumbled.

TOP STORIES; MOST READ ON BLOOMBERG

Chile Central Bank May Slash Rate to 7.75% as Inflation Slows

Chile’s central bank may slash interest rates by the most in five years after prices fell the fastest since 1966 in December.

Velarde May Keep Peru Lending Rate at 6.5% as Inflation Slows

Peru’s central bank will probably keep its benchmark lending rate at its highest level since 2001 as policy makers bet slowing global economic growth will help contain inflation.

Pimco Says Brazil, Korea Debt ‘Compelling,’ Warns on Ecuador

Bonds sold by Brazil, South Korea, Mexico and Singapore are compelling because emerging markets will avoid a “domino effect” of defaults, according to Pacific Investment Management Co.

Corn, Soybeans Fall as Firmer Dollar, Oil Drop Reduce Demand

Corn, soybeans and wheat fell for a second day after crude oil tumbled, eroding demand prospects for the crops as a source for alternative fuel, and as the dollar rose, making U.S. supplies expensive for overseas buyers.

MAIN COMPANIES:

Brazil

Cia. Vale do Rio Doce (VALE5 BS): The world’s biggest iron- ore producer will likely trade by year end at 44.10 reais a share, 42 percent less than previously estimated, Banco do Brasil SA analyst Antonio Emilio Ruiz wrote in a note yesterday. Vale fell 5 percent to 27.49 reais.

Chile

AES Gener SA (GENER CC): Chile’s second-biggest electricity generator yesterday started offering new shares to existing shareholders at 162.50 pesos each. The offering of 945 million shares, to raise about $240 million for planned investments, will expire Feb. 5. Gener fell 1.6 percent to 187.50 pesos.

Masisa SA (MASISA) : The maker of wood panels sold about $100 million of bonds in Chile to refinance short-term debt. Masisa rose 2.4 percent to 51.79 pesos.

Mexico

Cemex SAB (CEMEXCP MM): The largest cement maker in the Americas may have to pay fines of as much as $32,500 for each day a Colorado plant violated U.S. pollution standards since 1997. The shares fell 4.4 percent to 13.39 pesos.

Grupo Aeroportuario del Pacifico SAB (GAPB MM): The largest private airport operator in Mexico said passenger traffic fell 17 percent. The company lowered its forecast for 2009 passenger traffic, which may fall 3 percent to 5 percent. Gap, as the company is known, fell 2.8 percent to 29.99 pesos.

Wal-Mart de Mexico SA (WALMEXV MM): Latin America’s largest retailer said sales at stores open at least a year fell 0.8 percent in December from a year earlier. Walmex fell 5 percent to 34.27 pesos.

LATIN AMERICAN MARKETS:

Chile: The central bank will cut the target interest rate from 8.25 percent to 7.75 percent, according to the median forecast of 20 economists surveyed by Bloomberg. Policy makers will release the announcement at 4 p.m. New York time.

The peso was little changed at 630.35 per dollar.

The yield for a basket of five-year peso bonds in inflation-linked currency units, called unidades de fomento, rose eight basis points, or 0.08 percentage point, to 3.54 percent, according to Bloomberg composite prices.

Mexico: Consumer prices for December rose 0.67 percent, from 1.14 percent in November, according to the median forecast of 12 economists in a Bloomberg survey. The central bank will release the report at 10 a.m. New York time. A measure of consumer confidence fell to 82 in December, from 83.9 during November, according to the median forecast of six economists surveyed by Bloomberg. The national statistics agency will release its report at 3:30 p.m. New York time.

The peso fell 0.8 percent to 13.4818 per dollar.

The yield on Mexico’s 10 percent bond due December 2024 declined 16 basis points to 7.77 percent, according to Banco Santander SA.

Other prices in Latin American markets:

Argentina: The peso was little changed at 3.4533 per dollar.

The yield on the country’s inflation-linked peso bonds due in December 2033 rose eight basis points to 16.81 percent, according to Citigroup Inc.’s local unit.

Brazil: The real fell 4 percent to 2.2675 per dollar.

The yield on the zero-coupon, real-denominated bond due in January 2010 rose nine basis points to 12.14 percent, according to Banco Votorantim.

Colombia: The peso fell 1 percent to 2,213 per dollar.

The yield on Colombia’s benchmark 11 percent bonds due July 2020 rose one basis point to 10.2 percent, according to Colombia’s stock exchange.

Peru: The sol fell 0.2 percent to 3.1425 per dollar.

ECONOMIES: Brazil’s Automakers association will publish December vehicle sales, exports and production figures. Mexico will publish its December inflation figures, Chile will publish its overnight target rate and Peru will announce its benchmark lending rate.


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