HALISTER1: Brazil Real Outperforms Amid New Carwash Probe Report: Analysts

Brazil Real Outperforms Amid New Carwash Probe Report: Analysts

(Bloomberg) -- BRL is outperforming most peers amid new developments in the so-called Carwash probe; Isto É magazine today reported senator Delcidio Amaral gave testimony to prosecutors that may implicate President Rousseff.
  • “The market is pricing in the chance of a sooner-than- expected political shift,” Luciano Rostagno, chief strategist at Banco Mizuho do Brasil says in phone interview
  • Isto É magazine report says testimony alleges President Rousseff knew about the “whole process” of Petrobras purchase of an oil refinery in Pasadena, Calif., where buyer allegedly paid bribes
    • Also allegedly cited Ex-President Lula in testimony
    • The senator’s lawyer denied he made made a plea bargain
  • Mkt sees developments as potentially increasing chance of a new govt, one which may be more committed to reforms and fiscal adjustment
  • NOTE: Former head of builder OAS, one of companies investigated in Carwash probe, is negotiating a plea bargain, Folha, one the country’s main newspapers, says
  • There are signs increasing number of people willing to provide testimony, Ricardo Ribeiro, political analyst at MCM Consultores says
    • Willingness to testify may increase after arrest of Joao Santana, publicist in last Rousseff campaign, and also following a court decision that states a person condemned in appellate court goes immediately to jail, without hope of remaining free pending result of further appeals
  • Political outcomes aren’t clear yet; some people may also cite opposition in testimony, and there is also uncertainty on how an eventual new government will be built if Rousseff exits, Ribeiro says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
PETR4 BZ (Petroleo Brasileiro SA)

People
Luciano Rostagno (Banco Mizuho do Brasil SA)
Delcidio Gomes ((BRA)Senate)
Ricardo Mendes Ribeiro (MCM Consultores Associados Ltd)

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