Latin Day Ahead: Argentina May Default Without Debt Accord

Argentina will be forced to default by 2011 unless the government reaches an accord with investors, Stone Harbor Investment Partners says; Chile’s central bank will probably keep its benchmark interest rate at a record low; Striking Brazilian workers are winning salary increases that outpace inflation; Investors should sell Brazilian equities and buy Russian shares, according to Renaissance Capital.

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Argentina Forecast to Default Without Debt Accord: Week Ahead

Argentina will be forced to default by 2011 unless the government reaches an accord with investors holding $20 billion of bonds kept out of the last restructuring offer, Stone Harbor Investment Partners says.

Chile’s Central Bank Will Probably Hold Its Rate at Record Low

Chile’s central bank will probably keep its benchmark interest rate at a record low in a bid to safeguard a nascent economic rebound amid tame inflation.

Brazil Wage Gains Outpace Inflation Amid Recovery: Week Ahead

Striking Brazilian workers are winning salary increases that outpace inflation, adding to concern the nation’s economic recovery will prompt policy makers to lift interest rates from record lows.

Sell Brazil Stocks, Buy Russia as P/Es Converge: Chart of Day

Investors should sell Brazilian equities and buy Russian shares because the gap in valuations is poised to narrow, tracking this year’s convergence in government bond yields, according to Renaissance Capital.

MAIN COMPANIES

Brazil

Banco Panamericano SA (BPNM4) (BPNM4 BS): The Brazilian bank controlled by media magnate Silvio Santos may sell three-year dollar bonds to yield between 7.25 percent and 7.50 percent, according to a person familiar with the transaction. Panamericano fell 2.6 percent to 7.20 reais when the shares last traded Oct. 9.

GVT Holding SA (GVTT3 BS): The Brazilian telecommunications company was downgraded to “equal-weight” from “overweight” at Morgan Stanley, which said the stock is “fully valued” after a takeover by Telefonica SA. GVT rose 0.9 percent to 47.25 reais when shares last traded Oct. 9.

Tam SA (TAMM4 BZ): Brazil’s biggest airline said Chief Executive Officer David Barioni Neto left the company Oct. 9 of his own accord. The company named Líbano Miranda Barroso, the Chief Financial Officer, as an interim replacement. Tam gained 3.5 percent to 24 reais when it last traded Oct. 9.

TPI Triunfo Participacoes e Investimentos SA (TPIS3 BS): The Brazilian highway and port operator plans to sell 9.3 million new common shares, and could raise 53 million reais ($30 million), based on the Oct. 9 closing price of 5.75 reais. The shares fell 0.7 percent.

Votorantim Celulose e Papel SA (VCPA3 BS): The Brazilian company that bought Aracruz Celulose SA (ARCZ6 BS) to form the world’s biggest pulp maker was assigned a “stable” outlook by Fitch Ratings. VCP gained 0.5 percent to 30.04 reais when the shares last traded Oct. 9. Aracruz was also given a “stable” outlook. Shares gained 0.3 percent to 4.05 reais on Oct. 9.

Chile

Masisa SA (MASISA) : The maker of wood panels may partner with U.S.-based Hancock Natural Resource Group, Inc. to seek investment opportunities in Brazil. Masisa wants to buy about 40,000 hectares of forest property in Brazil, the company wrote in a filing posted Oct. 9 on the Chilean security regulator’s Web site. Masisa rose 4.4 percent to 82.92 pesos when shares last traded Oct. 9.

Mexico

Alfa SAB (ALFAA) : Third-quarter estimates of the world’s largest maker of aluminum engine heads and blocks were raised at Citigroup Inc. on the expected strength of its auto-parts and petrochemical businesses. Alfa rose 6 percent to 76.42 pesos.

Controladora Comercial Mexicana SAB (COMERUBC) : The price estimate of the supermarket operator that defaulted on debt a year ago was raised to 13.50 pesos from 9.50 pesos at Citigroup Inc. The company’s proposal to restructure “will feasibly receive a favorable response,” Citigroup Inc. analysts wrote in a note to clients after yesterday’s close. Comerci rose 0.4 percent to 10.75 pesos.

LATIN AMERICAN MARKETS:

Chile: The central bank will keep its overnight interest rate unchanged at a record low of 0.5 percent, according to all 11 economists in a Bloomberg survey. The report is scheduled to be released at 6 p.m. New York time.

The peso rose 0.1 percent to 554.10 per dollar.

The yield for a basket of Chile’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, fell two basis points to 2.72 percent on Oct. 9, according to Bloomberg composite prices.

Other prices in Latin American markets:

Argentina: The peso rose 0.1 percent to 3.8288 per dollar.

Brazil: The real fell 0.2 percent to 1.744 per dollar.

The yield on the zero-coupon, real-denominated bond due in January 2010 rose two basis points, or 0.02 percentage point, to 8.74 percent, according to Bloomberg prices.

Colombia: The peso was little changed at 1,847.20 per dollar.

The yield on Colombia’s benchmark 11 percent bonds due July 2020 was little changed at 8.756 percent, according to Colombia’s stock exchange.

Mexico: The peso rose 0.2 percent to 13.2218 per dollar.

The yield on Mexico’s 10 percent bond due December 2024 dropped five basis points to 8.01 percent, according to Banco Santander SA.

Peru: The sol gained 0.1 percent to 2.8570 per dollar.

The yield on Peru’s 8.6 percent bond maturing August 2017 rose two basis points to 4.91 percent, according to Citigroup Inc.’s unit in Lima.

ECONOMIES: Brazil will post its weekly trade balance; Chile will publish its nominal overnight rate target.

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 at papadopoulos@bloomberg.net

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