Goldman ups Brazil bonds, shifts other countries

www.forbes.com Reuters, 02.28.03, 10:22 AM ET

NEW YORK, Feb 28 (Reuters) - Goldman Sachs said it raised its allocation of Brazilian bonds in its model portfolio to overweight from underweight, thanks to the new government's push for austere fiscal policies and structural reforms. Goldman also noted that it moved South African bonds to 1.0 percent overweight from market weight, as debt ratios have improved "substantially" due to better fiscal performance. It said it cut Colombian bonds to market weight from a 1.5 percent overweight and moved Peru to market weight from 0.5 percent underweight. In addition, it said it lowered Korean bonds to 2.0 percent underweight from market weight. The investment bank said in a report received by Reuters on Friday that it moved Brazil to 1.0 percent overweight from 1.0 percent underweight, saying it sees positive prospects for President Luiz Inacio Lula da Silva's bid to give the central bank more autonomy and to change the bankruptcy and social security laws. It said the markets will be looking for progress from Lula on reaching a consensus on the overhauls of the tax and social security systems, which analysts say are critical if Brazil hopes to bolster its financial health. "We continue to like the economic policy approach of the (Workers Party) administration, which consists of pursuing tight fiscal and monetary policies and seeking the approval of a number of structural reforms," Goldman said. (Reporting by Susan Schneider, editing by Dave Zimmerman; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)