Latin Finance - March 2008 - 26
Special Report Investment Grade on Ice by John Rumsey Ascension to investment grade is thwarted by fiscal problems, as well as growth, inflation and rates. A lame duck president looks unlikely to tackle the issues head on. n the first Friday in January, equity trading volumes in Brazil collapsed to 2% of normal levels and market chaos reigned. The text of a rushed new tax law was so badly worded that banks were unsure whether it applied to share transactions involving foreign money. Investors duly sat on the sidelines. That story highlights the impact of the government’s December defeat in the Senate over renewal of the CPMF, a major financial transaction tax and central plank of President Lula’s second mandate. Failure prompted a scramble to implement replacement taxes by decree. The loss was made all the more bitter by the fact that it was a handful of dissident votes from within the pro-government coalition that tipped the balance, says Edmar Bacha, senior economist at Banco Itaú BBA. Quite apart from the humiliation, the hit to the government’s pocket of 40 billion reais per year is serious. The fiscal situation is now much worse than anticipated, he adds. The government started by seeking to make up the shortfall through new taxes and spending cuts. But realizing that an attempt to raise new taxes might run aground in the Senate and finding reductions, at least on current spending, unpalatable, other easier escape routes are now under scrutiny, says David Fleischer, professor of political science at the University of Brasilia and a political consultant at Brazil Focus. Finessing the accounts is one solution. The government is looking to take spending on the growth acceleration program, PAC, off the books in a move that could help it meet its primary budget surplus target of 3.8% of GDP, contributing as much as 0.5% to the total, Also in this section INFRASTRUCTURE FINANCE OIL AND GAS M&A OUTLOOK PRIVATE EQUITY EQUITY OUTLOOK COMMODITIES page 28 page 33 page 36 page 40 page 41 page 42 O UPDATE For more on Brazil, see www.latinfinance.com > 26 LATINFINANCE March 2008
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Latin Finance - March 2008
Table of Contents for the Digital Edition of Latin Finance - March 2008
Latin Finance - March 2008
Contents
Man of the Year
Peru Domestic Markets
General Atlantic Interview
Investment Bank Compensation
Vale Bids for Xstrata
Brazil Special Report
Infrastructure Finance
Oil & Gas
M&A Outlook
Private Equity
Mexico Special Report
Airports
Structured Finance
Argentine Mining
Latin Finance - March 2008 - Latin Finance - March 2008
Latin Finance - March 2008 - Cover2
Latin Finance - March 2008 - Contents
Latin Finance - March 2008 - 2
Latin Finance - March 2008 - 3
Latin Finance - March 2008 - 4
Latin Finance - March 2008 - 5
Latin Finance - March 2008 - 6
Latin Finance - March 2008 - 7
Latin Finance - March 2008 - 8
Latin Finance - March 2008 - 9
Latin Finance - March 2008 - 10
Latin Finance - March 2008 - 11
Latin Finance - March 2008 - 12
Latin Finance - March 2008 - 13
Latin Finance - March 2008 - Man of the Year
Latin Finance - March 2008 - 15
Latin Finance - March 2008 - 16
Latin Finance - March 2008 - 17
Latin Finance - March 2008 - Peru Domestic Markets
Latin Finance - March 2008 - 19
Latin Finance - March 2008 - General Atlantic Interview
Latin Finance - March 2008 - Investment Bank Compensation
Latin Finance - March 2008 - 22
Latin Finance - March 2008 - 23
Latin Finance - March 2008 - Vale Bids for Xstrata
Latin Finance - March 2008 - 25
Latin Finance - March 2008 - Brazil Special Report
Latin Finance - March 2008 - 27
Latin Finance - March 2008 - Infrastructure Finance
Latin Finance - March 2008 - 29
Latin Finance - March 2008 - 30
Latin Finance - March 2008 - 31
Latin Finance - March 2008 - 32
Latin Finance - March 2008 - Oil & Gas
Latin Finance - March 2008 - 34
Latin Finance - March 2008 - 35
Latin Finance - March 2008 - M&A Outlook
Latin Finance - March 2008 - 37
Latin Finance - March 2008 - 38
Latin Finance - March 2008 - 39
Latin Finance - March 2008 - Private Equity
Latin Finance - March 2008 - 41
Latin Finance - March 2008 - 42
Latin Finance - March 2008 - Mexico Special Report
Latin Finance - March 2008 - 44
Latin Finance - March 2008 - 45
Latin Finance - March 2008 - Airports
Latin Finance - March 2008 - 47
Latin Finance - March 2008 - 48
Latin Finance - March 2008 - Structured Finance
Latin Finance - March 2008 - 50
Latin Finance - March 2008 - 51
Latin Finance - March 2008 - 52
Latin Finance - March 2008 - 53
Latin Finance - March 2008 - 54
Latin Finance - March 2008 - 55
Latin Finance - March 2008 - Argentine Mining
Latin Finance - March 2008 - 57
Latin Finance - March 2008 - 58
Latin Finance - March 2008 - 59
Latin Finance - March 2008 - 60
Latin Finance - March 2008 - 61
Latin Finance - March 2008 - 62
Latin Finance - March 2008 - 63
Latin Finance - March 2008 - 64
Latin Finance - March 2008 - Cover3
Latin Finance - March 2008 - Cover4
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