Brazilian shares ease; VisaNet set for debut

LOS ANGELES (MarketWatch) — Brazilian equities slipped in the late stage of trading on Friday, but shares of Brazilian payment processor Redecard SA held to higher ground after the successful pricing of a rival’s initial public offering.

Brazil’s Bovespa index finished down 29 points, or 0.6%, at 51,485.61. Shares of iron ore provider Vale
lost 1.9% and oil giant Petrobras
shares were unchanged at 32.25 reals ($16.68).

The benchmark picked up 0.2% on a weekly basis.

Shares of Redecard rose 3.5% after Companhia Brasileira de Meios de Pagamento, better known as VisaNet, on Thursday raised 8.4 billion reals ($4.34 billion) from the sale of 559.8 million shares priced at 15 reals each, the top of an estimated price range of 12 reals to 15 reals. The total includes the sale of additional shares by underwriters.

The initial public offering of the payment-processing firm, an affiliate of Visa Inc.
is the biggest IPO ever in the Brazilian market and is the largest one worldwide so far this year.

VisaNet has “strong margins and is benefiting from the same growth factors as Visa with the switch from cash and checks to credit and debit cards, especially in emerging markets like Brazil,” said Nick Einhorn, an analyst at IPO specialist Renaissance Capital. “It’s not surprising that it did well, and there’s lots of interest in it.”

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VisaNet shares are scheduled to begin trading in Sao Paulo on Monday.

Shares in exchange operator BM&F Bovespa reversed course and fell 2.2%.

Stock in Cosan fell 1.1% after the sugar and ethanol maker reported a fiscal fourth-quarter loss of 40.2 million reals, wider than its loss of 5.3 million reals in the year-ago period. Net revenue rose to 2.35 billion reals from 843 million reals, and earnings before interest, taxes, depreciation and amortization rose to 165.9 million reals from 49.9 million.

The company said separately that BNDES, Brazil’s national development bank, extended to it a loan of 788 million reals, with 639 million reals for a greenfield project in Goiás state and the remainder for a cogeneration project in the state of Sao Paulo.

It also won a credit line of up to 1.1 billion reals from Banco Bradesco
The funds will be used to refinance promissory notes used for its purchase of the local fuel-distribution assets from Exxon Mobil’s Esso. The notes are due in November.

Meanwhile, Brazil’s central bank on Friday cut its expectations for gross domestic product growth this year and slightly pulled its inflation forecast for 2010 lower.

The bank, in its inflation report for the second quarter, said it now expects GDP to grow 0.8% this year, down from its previous forecast for growth of 1.2%. It also expects consumer price inflation of 3.9% in 2010 compared with its previous view of 4%. It pushed its 2009 inflation forecast to 4.1% from 4%.

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“Although highlighting that commodity prices and an activity rebound pose risks to inflation, the inflation outlook remains benign,’ wrote Paulo Mateus, an economist at Barclay’s Capital Research, in a note Friday.

“Given ongoing economic slack and low medium-term inflation risks, we continue to expect an additional 50 [basis points] cut at July’s Copom meeting, bringing the Selic rate to 8.75%, as the last move in this cycle.”

Mexico’s IPC rose 0.9% on Friday to 24,458.23, aided by a 2.2% advance in shares of America Movil
a 1.3% rise in shares of Carso Grupo Telecom and a 2.1% gain in shares of broadcaster Televisa

The IPC rose 0.8% for the week.

Chile’s IPSA ended 1.1% higher at $3,104.43, and logged a weekly loss of 1%. It was the second straight week of losses.

Argentina’s Merval closed down 1.7 points to 1,575.53 ahead of Sunday’s midterm Congressional elections. The benchmark gained 1.3% for the week.

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