Privatizing A Brazilian Giant

-- Brazil's slow-moving free-market reforms are getting a fresh impetus from the sale of Companhia Vale do Rio Doce, the state-controlled mining giant. In what's likely to be Latin America's biggest privatization, Brazil on Dec. 20 picked a group headed by Merrill Lynch & Co. and Rothschild Inc. from a star-studded field of competitors to manage the sale of the government's 51% share in CVRD. The sale, set for late 1996, should fatten state coffers by at least $5 billion.

Privatization of CVRD will mark "the point of no return" for Brazil's move away from decades of statism, says Amaury Bier, chief economist of Citibank in Sao Paulo. Recently, investors had been growing uneasy over the slow pace of free-market legislation in Brazil's Congress. The naming of the sale managers shows the government "is serious about moving ahead," says Ricardo Gallo, vice-president for capital markets at Bank of Boston in Sao Paulo.