At a meeting with equity analysts on Tuesday, February 25, senior executives of Embratel failed to announce the most eagerly awaited news of all ? conclusion of an agreement with creditor banks to refinance the carrier?s short-term debt. A deal has been worked out, they said, but the agreement won?t be formalized for another few days. Banks will agree to roll over short-term debt and some are reportedly willing to translate dollar debts into local currency. It?s no doubt unfortunate for Embratel that the exchange rate is unlikely to rise significantly according to even the most pessimistic forecasts. ?Local-currency translation would allow Embratel to save on hedging but the benefits would be offset by higher domestic interest rates,? says an analyst who attended the meeting.
The refinancing deal is a real possibility, analysts believe, but this is evidently not a cause for grand celebration among investors. Embratel stock closed down 1.45% on the day at 3.41 Brazilian Reals after gaining 4% earlier in the session.
Crisis
