www.grandforks.com Posted on Tue, Mar. 11, 2003 Associated Press

BRASILIA, Brazil - Soldiers from the Brazilian army will be deployed to help fight wild fires spreading out of control in the country's northernmost Amazon state, federal officials said Tuesday.

The federal government is sending three helicopters and three fire fighting brigades to Roraima state, on Brazil's border with Venezuela and Guyana, the country's Environment Ministry said in a statement.

The troops will aid the 500 firefighters already working to contain some 86 fires that so far have claimed nearly 40 square miles of forest and scrub land.

Most of the fires were started by farmers and spread out of control because of dry conditions in the region.

Slash and burn agriculture is a common practice in much of the Brazilian Amazon, because burning jungle brush to replenish the region's poor soil is cheaper than fertilizer.

In 1998, wild fires in Roraima claimed more than 1,150 square miles of forest and scrub land.

The 1998 fires drew international attention after spreading into the Yanomami Indian reservation in the western part of the state.

It was not immediately clear if the reservation was threatened by this year's fires.

www.upi.com By Bradley Brooks UPI Business Correspondent From the Business & Economics Desk Published 3/10/2003 7:05 PM

RIO DE JANEIRO, Brazil, March 10 (UPI) -- Brazil is leading the Latin American bond market to its biggest rally in more than four years, largely because of a socialist president's surprisingly austere financial moves.

While analysts are concerned a war in Iraq will damage emerging economies in numerous ways -- high oil prices spiking inflation, stock markets bottoming further -- those who follow bond markets say military action might actually aid the bond sector, as investors abandon equities for government debt.

"Clearly, the higher aversion to risk from the Iraqi war uncertainty is combining with a realization of the remarkable returns emerging market bonds have given in the last three to five years," said Brad Durham, director of fund research at the Boston-based EmergingPortfolio.com.

"It's really exceeded about all other asset classes out there."

Developing countries such as Russia, Brazil and Mexico -- the top three emerging-market bond issuers, according to Durham -- have seen their debt become attractive in the last six months as investors leaving turbulent equities are lured by the high returns on bonds.

Since October, J.P. Morgan Chase & Co.'s EMBI Global bond index has shot up 19 percent, with many nations gaining each month since that time. Not since 1998, just before Russia's default, have emerging bond markets seen such sustained success.

"I really think risk aversion plays into the hands of the emerging bond markets," Durham said. "It hurts equities, but it plays toward fixed income, just as being a safer investment, a safer asset class."

According to Durham's research, emerging-market bonds brought in $380 million net in the first seven weeks of this year -- about triple the year-earlier period.

Driving investors to emerging bond markets as well are the slim returns on U.S. Treasurys. Emerging market debt such as Brazil's benchmark 8 percent bond due 2014 yields 14 percent, or about three times as much U.S. bonds, too good an option for investors to pass up with anemic equities worldwide.

These returns are finally being noticed, analysts say.

"Emerging market bond funds have had a remarkable performance in the last five years, yet in every year up until 2002, investors were pulling money out," Durham said.

"At some point in 2002 there was a sentiment shift, a realization that this asset class has provided phenomenal returns -- something like 17 percent annual returns in the last five years."

For Brazil in particular, the shift was dramatic.

The country's bond lost one-third of its value in the first nine months of 2002, as investors fretted over the campaign and then election of President Luiz Inacio Lula da Silva, a leftist many feared would drive the country to default on its $240 billion debt.

Before the election, Brazil's bond sunk to 44 cents on the dollar, yielding 28 percent.

Since that time, it has risen to 75.88 cents, yielding 14.55 percent. Fitch Ratings on Monday raised its outlook on Brazilian debt to stable from negative.

One New York fixed-income strategist said that Brazil's rise is attributable to the surprising continuity in government policies Lula's first months have offered, and the notion that bluer skies are ahead for emerging debt.

"The assumption here is that once the war is over the market will do well, so we're seeing anticipation of that in Brazil," the strategist said.

"A lot of people are saying maybe Brazil has gone as far as it can go, but some people are obviously betting the opposite, as the run there has shown."

Not all emerging market bonds are faring so well, which analysts say is consistent with growing sophistication on the part of investors in terms of recognizing individual country risk.

The most striking example is that of Brazil and its neighbor Argentina, which defaulted in December 2001.

But there is also the case of Venezuela, where the struggle between President Hugo Chavez and his detractors has sent foreign capital fleeing.

Also, Uruguay's bond markets aren't exactly bouncing, as investors see that the country felt the brunt of Argentina's meltdown.

"Latin external credit markets have decoupled decisively of late from Latin local markets," a Morgan Stanley report this week indicated, highlighting the difference between Brazilian bonds and equities.

"Inflows into external debt funds continue and their deployment contributes to the sustenance of the credit rally."

Morgan Stanley did indicate it sees some sort of corrections as probable, either in a credit sell-off or cash being directed towards equity markets if and when they improve.

Durham said as well that despite a war with Iraq being priced into markets and actually spurring investors into bonds, a more protracted conflict could eventually hurt emerging market debt.

"Emerging markets, just because of the reputation they have for volatility, could see a flipside there," he said.

"But I don't really see much of a plummet, even in equities, after a war begins. I wouldn't be surprised if there was something of a rally."

www.planetark.org BRAZIL: March 10, 2003

RIO DE JANEIRO, Brazil - While Brazil's new left-leaning government is sticking to market-friendly economic policies, one minister with a wild revolutionary past seems less inclined to please investors in her ailing sector - energy.

As prospects strengthened this week for the nationalization of cash-strapped U.S. energy firm AES Corp's (AES.N) Brazilian affiliate Eletropaulo (ELPL4.SA), Mining and Energy Minister Dilma Rousseff has done little to soothe foreign investor nerves.

Analysts say tough remarks by the 55-year old former urban guerrilla suggest stricter government control over the market and pricing policies, which have become vitally important since the government is fighting a surge in inflation.

"So far, the (government's) economic team have been much more orthodox in what they say or do than the energy minister," said Jed Bailey, Latin American director with Cambridge Energy Research Association. "She sounded more radical than others."

Rousseff, a member of President Luiz Inacio Lula da Silva's Workers' Party, is known among leftists who came to power in January for taking part in a daredevil "expropriation" of $2.5 million from a former governor in 1969.

Rousseff fought the 1964-85 military regime, spent three years in jail and was tortured. Later, she got a doctorate in economics from Campinas University and was the finance secretary and twice the energy secretary of southern Rio Grande do Sul state. Rousseff is divorced and has one daughter.

NO DECISIONS YET

So far Rousseff, who inherited a power sector in crisis and mired in uncertainty whether it should be private or state-run, is yet to come up with key decisions on energy and fuel pricing, as well as a model for the electricity sector.

A critic of privatizations, she had denied any plans to nationalize the private part of the power sector.

But the problems at AES, which this week acknowledged a second default on its debt to the government's BNDES National Development Bank in a month, means a nationalization might become the first major event in the sector under her rule.

Rousseff told the Istoe Dinheiro Magazine recently the bank had every right to claim AES assets and did not rule out a provisional federal administration for Eletropaulo.

Analysts said such an act on behalf of a government-run bank would be bad for an already difficult investment climate. The sides have decided to continue talks until next week.

As for the sector's model, Rousseff has promised to come up with a plan by July.

"The government will have to regulate the market, improve the revenues of utilities and guarantee investment. It's a tough task but it has to be done, or we'll have power rationing again in two years," said Osvaldo Telles of BBV Securities. Nine months of rationing ended a year ago.

Her plan may involve a wider use of wind power in Brazil, which Rousseff has advocated in the past using a quotation from Bob Dylan: "The answer, my friend, is blowing in the wind."

OIL SECTOR SEEKING GUIDELINES

Rousseff is also responsible for the oil and gas sector, which analysts say needs urgent attention as well.

So far, Rousseff has been focused mainly on fuel pricing, which is key for inflation. Giant state oil firm Petrobras (PETR4.SA) (PBR.N) accounts for nearly all refining in Brazil, but it has not raised prices of gasoline and diesel since December despite a sharp rise in world oil prices.

Petrobras had obtained formal independence in price-setting, seen as key to its profitability, under the previous administration, and analysts attribute the lack of price hikes recently to Rousseff's influence.

Rousseff has said local fuel prices should continue to depend on world oil prices, but the government has to work out a mechanism to protect the population from sharp fluctuations.

"But the energy policy is also much wider than the question of pricing. Natural gas consumption and production, free access to gas pipelines, taxation of providers and producers all have to be tackled," said Jean Paul Prates of Expetro consultancy.

Story by Andrei Khalip

www.nytimes.com By CAROLE GOULD

INVESTMENT grade bonds now account for about 12 percent of the $587 million Salomon Brothers High Yield Bond fund — a portfolio that typically owns no such high-rated bonds, says its manager, Peter J. Wilby.

He bought those bonds after the crashes of Enron and WorldCom last year. "Other bond managers were running for the exits," Mr. Wilby said, "and that created big opportunities for us."

The overall credit quality of the portfolio's 200 issuers averages a rating of double-B from Standard & Poor's. (Junk bonds are those rated below triple-B.) The portfolio contains big chunks of triple-B bonds as well as single-B bonds bought in recent months.

The fund's trailing 12-month yield is 9.54 percent, compared with 8.94 percent, on average, for high-yield bonds tracked by Morningstar Inc.

The fund's duration, a measure of interest-rate sensitivity, is 4.5 years, mirroring the Salomon Smith Barney High Yield Market index, he said, "so it has junk bonds' typical sensitivity to interest rates."

But Mr. Wilby said that as interest rates rose, an improving economy would reduce credit risk, "allowing a high-yield fund to do quite well in that environment."

The fund returned 1.7 percent a year, on average, for the three years through February and adjusted for its front-end load, or sales charge, of 4.75 percent. That puts it in the top 16 percent of all high-yield bond funds, which lost 2.3 percent a year, on average, according to Morningstar. The fund returned 3.1 percent in the 12 months through February, adjusted for the load, compared with 0.3 percent for its group.(The fund's current 4.5 percent load is not yet part of Morningstar's database.)

Mr. Wilby, 44, is a managing director of Salomon Brothers Asset Management, the fund's adviser.

The fund can buy corporate or government bonds, typically denominated in dollars, anywhere in the world. Emerging-markets debt, which can account for up to 35 percent of assets, is now about 20 percent, Mr. Wilby said, because he is cautious about overseas risks.

The allocation is based on his 12-month forecast of credit quality.

"Even though the U.S. economy is sluggish," he said, "I see credit quality improving because companies have been punished for carrying too much debt and have spent the last year cleaning up their balance sheets."

Other factors should also contribute to a strong high-yield market, he said. As for corporate accounting scandals, the worst should be over, he said, and a war with Iraq has already been factored into the market.

The fund is about 5 percentage points overweight in the cable and media industries, compared with the Salomon Smith Barney High Yield Market index, Mr. Wilby said, because of his aggressive buying of bonds in these sectors during their meltdown last summer.

Mr. Wilby works with eight sector analysts to pick individual issuers. Over all, he said, he tends to avoid rapid-growth companies with no cash flow. Currently, he owns issues like AT&T and Sprint, as well as other beaten-down bonds. He also looks for above-average expected 12-month returns, based on an issue's price and yield.

He visits companies' executives, too. "We want to see that management is competent," he said, "and not so pro-shareholder that they don't understand their fiduciary duty to creditors as well."

He sells bonds when his industry or credit-quality outlook changes or an issuer's credit quality weakens.

In July, Mr. Wilby bought 9.87 percent subordinated debt due in February 2013 and issued by Cablevision Systems, the cable operator. He paid $67 for each $100 of face value. The bonds now trade at $103.50; they are rated B+ by Standard & Poor's.

Mr. Wilby said the bond's price did not reflect "what we believe to be the true value of the assets." The company generates cash flow, he said, and its core business is solid.

  N August, he bought a 7.25 percent coupon bond due in 2011 and issued by Ford Motor Credit. He paid $92.31 for each $100 in face value of the bonds, which now trade at $93.00. They are rated triple-B by Standard & Poor's.

The biggest bond issuers were under the most selling pressure last spring, Mr. Wilby said, as bond investors reduced their holdings of large-capitalization, investment-grade bonds to diversify their portfolios. " Ford started trading like a cheap high-yield bond," he said, partly because investors exaggerated what they saw as Ford's competitive disadvantage to other automakers.

In July, Mr. Wilby bought 12 percent coupon bonds issued by the Brazilian government and maturing in April 2010. "The government was under a lot of pressure" at the time, he said, as investors feared that the Workers' Party candidate for president, Luiz Inácio Lula da Silva, "would not be market friendly" if elected. But Mr. Wilby said he thought that those fears were exaggerated.

Market confidence has improved, he added, after Mr. da Silva's victory in October. The bonds, for which he paid $63.50 for each $100 in face value, now trade at $76.75. 

www.miami.com Posted on Sat, Mar. 08, 2003 BY NERY YNCLAN nynclan@herald.com

MAN OF MANY FACETS: Eudes d'Orleans-Braganza, whose ancestors include European and Brazilian royalty, is a wine connoisseur and golf aficionado.

If you were to sketch Eudes d'Orleans-Braganza's family tree, it would be a distinct royal blue.

He details the regal highlights as if he were reciting a grocery list:

``My mother's grandfather was the last king of Bavaria. My father's great-grandfather was the son of the last king of France, and there we get Orleans. He married the princess of Brazil, and there we get Braganza. The princess Isabel of Brazil married Louis Gaston d'Orleans. He was the count of Eu, who was the son of the Duke of Nemours, who was the son of the last king of France.''

Lost yet? Fast-forward a couple of generations, and the genealogical bottom line is that Orleans-Braganza is the great-great grandson of Brazil's last emperor, Dom Pedro II.

Despite the colorful lineage, a career as a submarine commander and a much-publicized brush with death, the life of this wealthy Rio de Janeiro businessman doesn't include crowns and curtsies. But he will be treated like royalty on Saturday as the guest of honor at the Wolfsonian Imperial Propaganda Ball.

This is the Miami Beach museum's annual fundraising weekend, which will highlight the current exhibition, From Emperors to Hoi Polloi: Portraits of an Era, 1851-1945, on view through June 24 at 1001 Washington Ave. The ball and exhibit are among a variety of special events that began Friday.

Executive director Cathy Leff says the museum decided to celebrate Brazil because so many Brazilians live and travel in South Florida and so many non-Brazilians are unaware of the country's unique imperial past. It was Wolfsonian founder Micky Wolfson, she says, who insisted they track down the imperial family in the flesh.

''When they said yes, we thought it was fantastic. It brings the past up to the present,'' says Leff. ``To be able to celebrate the history of Brazil and personify it with the imperial family -- it's the ideal.''

Brazil was under Portuguese colonial rule until 1889, after a coup sent the country's second and last emperor, Dom Pedro II, into exile in Europe.

BLOODLESS COUP

University of Miami Professor Jerry Haar says the peaceful nature of the coup meant much of the family could return to Brazil in later years.

''Brazil was never ruled with an iron fist. There wasn't this level of violence you saw in other monarchies,'' Haar says. ``For some, there is some kind of nostalgia for the monarchy like you see in the U.K. It's their little fantasy, but it's much ado about nothing. Most Brazilians chuckle at that kind of stuff.''

Orleans-Braganza, 63, says he visits Florida often for its golf courses, amusement parks and stone crabs. He acknowledges that the average Brazilian would not recognize him and that generally the media stay away.

'Really, it's in Europe where there are still monarchies that we get the `Your Highness' and 'Prince' thing,'' he says. ``In Brazil, if we do something wrong we will have the front pages. But we stay quiet. We're good.''

Brazilian journalist Heloiza Herscovitz, an assistant professor at Florida International University, says descendants of the monarchy are largely ignored by media because of the colonial connection.

''Most people in Brazil are worried about getting money for bread and milk -- not about royal descendants,'' Herscovitz says.

Even so, Orleans-Braganza says he and his wife, Mercedes, have been followed more closely in the news than his 11 siblings over the years for a personal reason. On their honeymoon in April 1976, the couple's small plane crashed into a jungle mountainside en route from Jamaica.

They were rescued six days later, along with the pilot.

''My wife had the worst injuries, terrible burns, broken bones. She was in treatment for eight months,'' he says. ``I was blind in one eye and my left side was almost destroyed, but I could walk. We found a hidden marijuana plantation and found some rice in a bag there. It was raining all day, so we had water. On the sixth day, we were found and taken to Miami. It was the fastest I have ever gotten through customs in Miami in my life.''

REARED ON FARM

Orleans-Braganza was born in France at the beginning of World War II but grew up in Brazil on a farm. ''Communism took everything we had in the eastern countries,'' he says. ``We didn't inherit anything. What our parents gave us was a very good education. Everyone had to make their own destiny.''

Orleans-Braganza went on to serve as lieutenant commander on two submarines in the Brazilian navy before moving into business. He's now a board member of Grupo Brasil, a holding company with annual revenue of $350 million that directs industrial suppliers to automotive companies. He's also chairman of one of the group's interests, Vulcan, a major pipe manufacturer.

As for contemporary Brazilian politics, Orleans-Braganza says he is optimistic about the government of Luiz Inácio Lula da Silva despite a recent spate of gang violence.

''Lula came into office as an avowed leftist, and now he's acting as a centrist,'' he says. ``From a business point of view, the new presidency makes us hopeful. He has chosen good people to run the most important ministries and to continue a policy of not letting the country go into default.''

Although Orleans-Braganza has not sought political office, he has the resumé of a diplomat. He speaks six languages and is a wine connoisseur and golf aficionado. He has designed golf courses in Brazil and is president of the Brazilian Golf Federation.

His six children live in Brazil. He will attend the ball with his wife and eldest son, Luiz Philippe, an executive with AOL Latin America in Rio.

GOOD, BAD JOKES

Daughter Maria Francisca, a graphic designer, says the blue blood has its ups and downs.

''I have always enjoyed being able to travel and visit different family members all around the world. It is always so interesting to hear them talk about our history and to know that my family has had such a big impact in history and the way the world is today,'' she says.

``People here in Brazil have always made little jokes, but in a caring way, and I enjoy that because it kind of breaks the ice. On the other hand, some people are jealous and sometimes make very rude jokes about it.''

The father says it comes with the territory, and that all children descended from royalty become accustomed to the perks and the pokes.

Asked if anyone ever jokingly calls him ''emperor,'' Orleans-Braganza says with a wink: 'Oh yes, all my brothers and me have gotten that all our lives from the wives and the family -- `my emperor,' 'my prince.' Sometimes in a good way -- and sometimes not in a good way.''

BLUE BLOOD?

The Web is full of sites to help you find your roots. Experts say Genealogy Detective is a great tool for beginners and pros. It costs $24.97 and downloads into your computer directly from rwm.net