Bloomberg News

Latin Day Ahead: Colombia Bank May Cut Interest Rate Again

January 30, 2009

Colombia’s central bank may cut its benchmark interest rate for a second month; Mexico’s peso stuns UBS and car dealers with its biggest drop since 1995; Rio Tinto will sell a potash project and the Corumba iron-ore mine to Cia. Vale do Rio Doce; Galp and Petrobras find evidence of oil in an onshore block in Brazil’s Sergipe basin and Vitro said it will default on more than $1.2 billion of debt after losses from derivatives.

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Colombia Bank May Cut Interest Rate Again as Economy Slumps

Colombia’s central bank may cut its benchmark interest rate for a second month as it seeks to spur consumer spending and revive a slumping economy.

Mexico Peso Stuns UBS, Car Dealers With Biggest Drop Since 1995

The steepest decline in Mexico’s peso in 13 years blindsided everyone from UBS AG economists to Gustavo Huitron, the local marketing manager for Mercedes-Benz.

Rio Tinto to Sell Potash Project, Iron Ore Mine to Vale

Rio Tinto Group, the world’s third-largest mining company, agreed to sell a potash project in Argentina and the Corumba iron ore mine in Brazil to Cia. Vale do Rio Doce for $1.6 billion to help pay debt.

Galp, Petrobras Find Evidence of Oil in Onshore Sergipe Block

Galp Energia SGPS SA, Portugal’s biggest oil company, and Petroleo Brasileiro SA, Brazil’s state-controlled crude producer, found more evidence of oil and gas in an onshore block in Brazil’s Sergipe Basin, the country’s petroleum regulator said.

Vitro to Default After ‘Double Whammy’ of Derivatives, Economy

Vitro SAB (VITROA), Mexico’s largest glassmaker, said it will default on more than $1.2 billion of debt after losses from derivatives tied to natural-gas prices undercut years of struggle to reduce borrowings.

MAIN COMPANIES:

Brazil

Empresa Brasileira de Aeronautica SA (EMBR3 BS): The world’s third-largest planemaker is considering building a bigger aircraft to compete with Airbus SAS and Boeing Co., Sueddeutsche Zeitung reported yesterday, citing Chief Executive Officer Frederico Curado. Embraer, as the company is known, fell 2.6 percent to 9.04 reais.

Lupatech SA (LUPA3) (LUPA3 BS): The maker of parts for the oil and natural gas industries said the company’s backlog of orders rose to a record 605 million reais ($264 million). Lupatech fell 2.7 percent to 24.33 reais.

Cia. Vale do Rio Doce (VALE5 BS): The world’s second- largest nickel refiner reached an agreement with Newfoundland and Labrador to build a plant that would process nickel concentrate in the Canadian province, clearing an impasse that halted shipments. Vale fell 3 percent to 28.50 reais.

Chile

Embotelladora Andina SA (A:US) : The Coca-Cola bottler with operations in Chile, Argentina, and Brazil reported full- year profit rose 6.7 percent to 94.8 billion pesos ($155 million) last year. Andina was unchanged at 1,520 pesos.

Mexico

Alfa SAB (ALFAA) : The world’s largest maker of aluminum engine heads and blocks had a fourth-quarter loss of 9.62 billion pesos ($678 million) because of a drop in demand and bad financial bets on natural gas. Alfa fell 8.2 percent to 23.13 pesos.

Grupo Financiero Banorte SAB (GFNORTEO) : Mexico’s biggest publicly listed bank said fourth-quarter profit tumbled 24 percent to 1.27 billion pesos, the company’s first profit decline in three years. The median estimate of three analysts surveyed by Bloomberg was for adjusted net income of 1.43 billion pesos. Banorte fell 3.8 percent to 19.91 pesos.

Vitro SAB (VITROA MM): The biggest Mexican glassmaker said it will miss $44.8 million in interest payments next week to preserve cash. Vitro fell 2.3 percent to 5.06 pesos.

LATIN AMERICAN MARKETS:

Chile: Industrial output declined for a third straight month in December, dropping 2 percent after a 5.7 percent slide in November, according to the median forecast of 13 economists surveyed by Bloomberg News.

The unemployment rate fell to 7.3 percent in December from 7.5 percent during November, according to the median estimate of 12 economists in a Bloomberg survey. The National Statistics Institute is set to release the figures at 7 a.m. New York time.

The peso weakened 0.1 percent to 612.95 per dollar.

The yield for a basket of five-year peso bonds in inflation-linked currency units, called unidades de fomento, fell 14 basis points, or 0.14 percentage point, to 2.72 percent, according to Bloomberg composite prices.

Colombia: The central bank will lower its overnight lending interest rate by a half percentage point to 9 percent, according to the median forecast of 36 economists surveyed by Bloomberg.

The urban jobless rate rose to 11.1 percent in December from 10.4 percent a month earlier, according to the median forecast of 14 economists surveyed by Bloomberg.

The peso plunged 1.7 percent to 2,393 per dollar.

The yield on Colombia’s benchmark 11 percent bonds due July 2020 fell two basis points to 9.74 percent, according to Colombia’s stock exchange.

Other prices in Latin American markets:

Argentina: The peso rose for the first day in 12, gaining 0.1 percent to 3.4852 per dollar.

The yield on the country’s inflation-linked peso bonds due in December 2033 was little changed at 16.43 percent, according to Bloomberg prices.

Brazil: The real fell 1 percent to 2.2935 per dollar.

The yield on the zero-coupon, real-denominated bond due in January 2010 rose six basis points to 11.38 percent, according to Banco Votorantim.

Mexico: The peso declined 1.2 percent to 14.1915 per dollar.

The yield on Mexico’s 10 percent bond due December 2024 rose five basis points to 7.87 percent, according to Banco Santander SA.

Peru: The sol weakened 0.2 percent to 3.1695 per dollar.

The yield on Peru’s 8.6 percent bond maturing August 2017 fell six basis points to 7.09 percent, according to Citigroup Inc.’s unit in Lima.

ECONOMIES: Chile will publish December industrial production, employment rate and copper production; Venezuela will publish its crude-oil basket; Argentina will publish December construction activity; Colombia will publish its overnight lending rate and unemployment rate and Mexico will publish its public balance.

To contact the reporter on this story: Laura Price in London at lprice3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net


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