Author: Antonio Guerrero

PETROBRAS TO SELL OFF ASSETS WORLDWIDE

By Antonio Guerrero

Brazil’s state-controlled Petrobras oil company is selling its worldwide noncore assets to support a $224 billion capital expenditure plan for 2012–15—which will fund development of the country’s pre-salt offshore oil fields.

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Petrobras offloads assets

Among the first Petrobras assets slated for sale is its Nansei Sekiyu oil refining unit in Japan, which it acquired three years ago to act as a base for exports to Asian markets.

Embraer of Brazil—the world’s fourth largest airplane maker—is under investigation by the US Securities and Exchange Commission and the Justice Department for alleged violations of the US Foreign Corrupt Practices Act of 1977, which bans company payments to government officials in exchange for contracts. Embraer, nevertheless, continues to bid for a $1.5 billion sale of Super Tucano light attack aircraft to the US Air Force.

The World Bank approved an $8 billion loan to support Brazil’s poverty eradication efforts. Brazilian President Dilma Rousseff launched the “Brazil Without Misery” program in June—aiming to raise 16 million people out of poverty through health and education investment, among other programs. Funds, granted under the bank’s Country Partnership Strategy for 2012–15, will also be used to promote economic development in the northeastern states, the country’s poorest region. During the administration of Rousseff’s predecessor, Luiz Inácio Lula da Silva, 40 million Brazilians moved into the middle class.

HSBC is selling Losango, its Brazilian consumer finance unit, as part of the UK banking group’s global strategic restructuring initiative to cut $3.5 billion in costs by 2013. Losango should be a prime target for domestic banks seeking to tap Brazil’s growing consumer market. It issues private-label credit cards and direct consumer credit. HSBC has not announced an asking price, but Losango has some 20 million customers and an estimated 20% share of Brazil’s consumer loan market. HSBC is expected to retain control of HSBC Bank Brazil. J.P. Morgan is lead arranger on the Losango sale.