Bloomberg News

Latin Day Ahead: Mexico Bank May Reduce Rate for Second Month

February 20, 2009

Mexico’s central bank will probably reduce its benchmark interest rate for the second consecutive month; Mexico’s bond risk is higher than Brazil’s for the first time since 2001 because of a war with drug traffickers and a record-low peso; Nissan will shift production to Mexico to counter a stronger yen and JBS SA (JBSS3) reported a fourth-quarter loss after beef prices fell and margins narrowed.

TOP STORIES; MOST READ ON BLOOMBERG

Mexico Bank May Reduce Rate for Second Month to Revive Economy

Mexico’s central bank will probably reduce its benchmark interest rate for the second consecutive month in a bid to revive a flagging economy.

Mexico Bond Risk Tops Brazil First Time Since 2001 on Drug War

Mexico is riskier than Brazil in the bond market for the first time since at least 2001 as a war with drug traffickers, slowing exports to the U.S. and a record-low peso drive away investors.

Nissan Will Shift Production to Mexico to Counter Stronger Yen

Nissan Motor Co., facing its first loss in nine years, will shift production of some small cars sold overseas to Mexico as the surging yen erodes profits on vehicles exported from Japan.

JBS Reports a Fourth-Quarter Loss on Beef Prices, Lower Margins

JBS SA, the world’s largest beef producer, reported a fourth-quarter loss after prices fell and margins narrowed.

MAIN COMPANIES:

Argentina

Banco Patagonia SA (BPAT) : The Buenos Aires-based lender said fourth-quarter profit more than doubled and the company extended a share buyback program. Net income rose to 108 million pesos ($30.5 million) from 40.9 million pesos a year earlier. Patagonia fell 1.5 percent to 1.35 pesos.

Brazil

Banco do Brasil SA (BBAS3 BS): The forecast of 6.2 billion reais profit in 2009 for Latin America’s biggest state-controlled bank is “in line” with estimates by Deutsche Bank AG analyst Mario Pierry, the analyst wrote in a note. Banco do Brasil, rated “buy” at Deutsche, rose 2.2 percent to 13.80 reais.

Cia. Vale do Rio Doce (VALE5 BS): The world’s largest iron- ore producer said fourth-quarter profit fell to $1.37 billion, or 26 cents a share. Vale rose 0.6 percent to 29.79 reais.

Empresa Brasileira de Aeronautica SA (EMBR3 BS): The world’s fourth-largest aircraft maker will cut its workforce by 20 percent, and reduce the number of planes delivered this year to 242 from a previous forecast of 270. Embraer fell 1.9 percent to 8.46 reais.

Mexico

Wal-Mart de Mexico SAB (WALMEXV MM): Latin America’s largest retailer may raise capital spending to 11.8 billion pesos ($799.2 million) this year, the company said yesterday. Walmex, as the company is known, dropped 0.8 percent 29.30 pesos.

LATIN AMERICAN MARKETS:

Brazil: The unemployment rate rose to 7.8 percent in January, from 6.8 percent in December, according to the median estimate of 24 economists in a Bloomberg survey.

Brazil’s statistics agency will release the report at 7 a.m. New York time.

The real fell 0.8 percent to 2.3738 per dollar.

The yield on the zero-coupon, real-denominated bonds due in January 2010 fell eight basis points, or 0.08 percentage point, to 11.03 percent, according to Banco Votorantim.

Mexico: Central bank policy makers will cut their overnight rate by a half-percentage point to 7.25 percent, according to the median estimate of 23 economists in a Bloomberg survey.

Banco de Mexico will announce its decision at 10 a.m. New York time.

The peso declined 0.9 percent to 14.7589 per dollar.

The yield on the country’s 10 percent bond due December 2024 fell five basis points to 8.22 percent, according to Banco Santander SA.

Other prices in Latin American markets:

Argentina: The peso fell 0.7 percent to 3.5341 per dollar.

The yield on the country’s 5.83 percent dollar bonds due in December 2033 was unchanged at 17.59 percent, according to Citigroup Inc.’s local unit.

Chile: The peso slid 2.3 percent to 610.55 per dollar.

The yield for a basket of the nation’s 10-year, fixed-rate peso bonds dropped two basis points to 4.72 percent, according to Bloomberg composite prices.

Colombia: The peso was little changed at 2,554.25 per dollar.

The yield on Colombia’s 11 percent bonds due in July 2020 declined five basis points to 9.90 percent, according to Colombia’s stock exchange.

Peru: The sol slid 0.1 percent to 3.2470 per dollar.

The yield on the 8.6 percent bond maturing in August 2017 was unchanged at 7.15 percent, according to Citigroup prices.

ECONOMIES: Brazil will publish its January unemployment rate, current account and foreign direct investment figures; Mexico will publish its overnight rate and GDP figures and Venezuela will publish its weekly crude oil basket.

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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