TCRLA_Public/050704.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                    L A T I N   A M E R I C A

           Monday, July 4, 2005, Vol. 6, Issue 130

                            Headlines


A R G E N T I N A

AERO VIP: Gets Court Approval to Reorganize
BAIRES POST: Enters Bankruptcy on Court Orders
BANCO BANEX: Moody's Ups Ratings in Line With Sovereign Action
BANCO COMAFI: Deposit Rating Climbs Following Sovereign Upgrade
BANCO DE LA CIUDAD: Moody's Ups Foreign Currency Deposit Ratings

BANCO DE LA PROVINCIA: Moody's Ups LTFC Deposit Ratings to Caa1
BANCO DE VALORES: Ratings Climb Following Sovereign Upgrade
BANCO DEL TUCUMAN: Foreign Currency Deposit Ratings Improve
BANCO FRANCES: Deposit Rating Climbs Following Sovereign Upgrade
BANCO GALICIA: Moody's Raises FC Issuer, Deposit Ratings to Caa1

BANCO HIPOTECARIO: Sovereign Upgrade Pushes Ratings Up
BANCO MACRO BANSUD: Foreign Currency Deposit Ratings Upped
BANCO NACION: Moody's Ups Ratings in Line With Sovereign Action
BANCO RIO: LTFC Deposit Rating Climbs to Caa1
BANCO SOCIETE GENERALE: Foreign Currency Deposit Ratings Upped

BANKBOSTON (ARGENTINA): LTFC Deposit Ratings Raised to Caa1
CO.I.M.PRO S.R.L.: Liquidates Assets to Pay Debts
CREDICOOP COOPERATIVO: Moody's Ups LTFC Deposit Ratings
ELITE S.R.L.: Trustee to Submit General Report
LOMA NEGRA: Brazilian Firm Signs Acquisition Deal

PAN AMERICAN ENERGY: Moody's Assigns Ba2 Global LC Rating
ROSEPA S.A.: Concludes Reorganization
YPF: Moody's Upgrades Foreign Currency Issuer Rating To B3
* ARGENTINA: IMF Board Concludes 2005 Article IV Consultation
* BUENOS AIRES: Moody's Upgrades Foreign Currency Rating to B3


B E R M U D A

FOSTER WHEELER: Launches New Equity-for-Debt Exchange
LEADING SPIRIT: Court Appoints Provisional Liquidators
LORAL SPACE: New Plan Supplement Details Post Reorg Deals
LORAL SPACE: Management Incentive Bonus Program Approved
SAGAX II FUND: Creditors Advised to Submit Claims


B O L I V I A

BANCO NACION (BOLIVIA): Moody's Upgrades Deposit Ratings


B R A Z I L

BANCO SAFRA: Fitch Affirms Ratings
BANCO VOTORANTIM: Places $125M, 3-Year Overseas Bond Issue
ELETROPAULO METROPOLITANA: Secures Approval to Raise Rates 2.25%
LOCALIZA RENT: To Start Paying Dividends July 14
PARMALAT BRAZIL: Ordered to Formulate Plan Within 2 Months

TCP: Board Okays Capital Stock Increase
UNIBANCO: Proposes Global Public Offering of UNITs, GDSs
UNIBANCO: Fitch Affirms Various Ratings


C O L O M B I A

FINANCIERA ENERGETICA: S&P Provides Ratings Analysis
PAZ DEL RIO: Source Confirms Shareholders Mulling Stake Sale


M E X I C O

AOL LATIN AMERICA: Taps Shearman & Sterling as Lead Counsel
GRUPO DESC: Sells Valve Lifter Business to Eaton Corporation
HYLSA: Summary of S&P Analysis on Ratings
SATMEX: Seeks Bankruptcy Protection Under Mexican Jurisdiction
SATMEX: Creditors Frustrated Over Mexican Bankruptcy


U R U G U A Y

BANCO NACION (URUGUAY): Moody's Upgrades Deposit Ratings


V E N E Z U E L A

PDVSA: To Submit 2003 Financial Results to U.S. SEC
PDVSA: Harvest Natural Resources Receives Partial Payment


     - - - - - - - - - -

=================
A R G E N T I N A
=================

AERO VIP: Gets Court Approval to Reorganize
-------------------------------------------
Aero Vip S.A. will begin reorganization as its petition to do so
was approved by Court No. 16 of Buenos Aires' civil and
commercial tribunal. Initiating the reorganization process
allows the Company to negotiate a settlement with its creditors
in order to avoid a straight liquidation.

Estudio Di Santo, Fazio, Frumento will oversee the
reorganization proceedings as the court-appointed trustee. The
trustee will verify creditors' claims until Sep. 26, 2005. The
validated claims will be presented in court as individual
reports on Nov. 8, 2005.

The trustee is also required by the court to submit a general
report essentially auditing the Company's accounting and
business records as well as summarizing important events
pertaining to the reorganization. The report will be presented
in court on Dec. 21, 2005.

An Informative Assembly, the final stage of a reorganization
where the settlement proposal is presented to the Company's
creditors for approval, is scheduled on June 28, 2006.

Clerk No. 31 assists the court on this case.

CONTACT: Aero Vip S.A.
         Ricardo Rojas 401
         Buenos Aires

         Estudio Di Santo, Fazio, Frumento, Trustee
         Tucuman 1367
         Buenos Aires


BAIRES POST: Enters Bankruptcy on Court Orders
----------------------------------------------
Baires Post S.R.L. enters bankruptcy protection after Court No.
20 of Buenos Aires' civil and commercial tribunal, with the
assistance of Clerk No. 40, ordered the Company's liquidation.
The order effectively transfers control of the Company's assets
to a court-appointed trustee who will supervise the liquidation
proceedings.

Infobae reports that the court selected Maria Angelica Adornetto
as trustee. Ms. Adornetto will be verifying creditors' proofs of
claim until the end of the verification phase on Sep. 23, 2005.

Argentine bankruptcy law requires the trustee to provide the
court with individual reports on the forwarded claims and a
general report containing an audit of the Company's accounting
and business records. The individual reports will be submitted
on Nov. 7, 2005 followed by the general report, which is due on
Dec. 20, 2005.

CONTACT: Ms. Maria Angelica Adornetto, Trustee
         Suipacha 670
         Buenos Aires


BANCO BANEX: Moody's Ups Ratings in Line With Sovereign Action
--------------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating to Caa1 from Caa2 for Banco Banex S.A.
following Moody's upgrade of Argentina's foreign currency
ceiling for bank deposits to Caa1. Moody's also raised the
bank's National Scale foreign currency deposit rating to Ba1.ar
from B1.ar. All the ratings have a stable outlook.


BANCO COMAFI: Deposit Rating Climbs Following Sovereign Upgrade
---------------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating to Caa1 from Caa2 for Banco Comafi S.A.
following Moody's upgrade of Argentina's foreign currency
ceiling for bank deposits to Caa1. Moody's also raised the
bank's National Scale foreign currency deposit rating to Ba1.ar
from B1.ar. All the ratings have a stable outlook.


BANCO DE LA CIUDAD: Moody's Ups Foreign Currency Deposit Ratings
----------------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating to Caa1 from Caa2 for Banco de la Ciudad
de Buenos Aires following Moody's upgrade of Argentina's foreign
currency ceiling for bank deposits to Caa1. Moody's also raised
the bank's National Scale foreign currency deposit rating to
Ba1.ar from B1.ar. All the ratings have a stable outlook.


BANCO DE LA PROVINCIA: Moody's Ups LTFC Deposit Ratings to Caa1
---------------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit ratings to Caa1 from Caa2 for Banco de la
Provincia de Buenos Aires following Moody's upgrade of
Argentina's foreign currency ceiling for bank deposits to Caa1.
Moody's also raised the bank's National Scale foreign currency
deposit ratings to Ba1.ar from B1.ar. All the ratings have a
stable outlook.


BANCO DE VALORES: Ratings Climb Following Sovereign Upgrade
-----------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating to Caa1 from Caa2 for Banco de Valores
S.A. following Moody's upgrade of Argentina's foreign currency
ceiling for bank deposits to Caa1. Moody's also raised the
bank's National Scale foreign currency deposit rating to Ba1.ar
from B1.ar. All the ratings have a stable outlook.


BANCO DEL TUCUMAN: Foreign Currency Deposit Ratings Improve
-----------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating to Caa1 from Caa2 for Banco del Tucuman
S.A. following Moody's upgrade of Argentina's foreign currency
ceiling for bank deposits to Caa1. Moody's also raised the
bank's National Scale foreign currency deposit rating to Ba1.ar
from B1.ar. All the ratings have a stable outlook.


BANCO FRANCES: Deposit Rating Climbs Following Sovereign Upgrade
----------------------------------------------------------------
Moody's Investors Service upgraded the long-term foreign
currency deposit rating to Caa1 from Caa2 for BBVA Banco Frances
S.A. following Moody's upgrade of Argentina's foreign currency
ceiling for bank deposits to Caa1. All the ratings have a stable
outlook.


BANCO GALICIA: Moody's Raises FC Issuer, Deposit Ratings to Caa1
----------------------------------------------------------------
Moody's Investors Service upgraded Banco de Galicia y Buenos
Aires S.A.'s foreign currency issuer rating to Caa1 and long
term foreign currency deposits to Caa1 following Moody's upgrade
of Argentina's foreign currency ceiling for bank deposits to
Caa1. All the ratings have a stable outlook.


BANCO HIPOTECARIO: Sovereign Upgrade Pushes Ratings Up
------------------------------------------------------
Moody's Investors Service upgraded the long-term foreign
currency deposit rating to Caa1 from Caa2 for Banco Hipotecario
S.A. following Moody's upgrade of Argentina's foreign currency
ceiling for bank deposits to Caa1. All the ratings have a stable
outlook.


BANCO MACRO BANSUD: Foreign Currency Deposit Ratings Upped
----------------------------------------------------------
Moody's Investors Service upgraded the long-term foreign
currency deposit rating to Caa1 from Caa2 for Banco Macro Bansud
S.A. following Moody's upgrade of Argentina's foreign currency
ceiling for bank deposits to Caa1. Moody's also raised the
bank's National Scale foreign currency deposit rating to Ba1.ar
from B1.ar. All the ratings have a stable outlook.


BANCO NACION: Moody's Ups Ratings in Line With Sovereign Action
---------------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating of Banco de la Nacion Argentina to Caa1
from Caa2 following Moody's upgrade of Argentina's foreign
currency ceiling for bank deposits to Caa1. The rating has a
stable outlook.


BANCO RIO: LTFC Deposit Rating Climbs to Caa1
---------------------------------------------
Moody's Investors Service upgraded the long-term foreign
currency deposit ratings to Caa1 from Caa2 for Banco Rio de la
Plata S.A. following Moody's upgrade of Argentina's foreign
currency ceiling for bank deposits to Caa1. Moody's also raised
the National Scale foreign currency deposit ratings to Ba1.ar
from B1.ar of Banco Rio de la Plata S.A.. All the ratings have a
stable outlook.


BANCO SOCIETE GENERALE: Foreign Currency Deposit Ratings Upped
--------------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating to Caa1 from Caa2 for Banco Societe
Generale S.A. (Banco Supervielle) following Moody's upgrade of
Argentina's foreign currency ceiling for bank deposits to Caa1.
Moody's also raised the bank's National Scale foreign currency
deposit rating to Ba1.ar from B1.ar. All the ratings have a
stable outlook.


BANKBOSTON (ARGENTINA): LTFC Deposit Ratings Raised to Caa1
-----------------------------------------------------------
Moody's Investors Service upgraded the long-term foreign
currency deposit rating to Caa1 from Caa2 for BankBoston, N.A.
(Argentina) following Moody's upgrade of Argentina's foreign
currency ceiling for bank deposits to Caa1. All the ratings have
a stable outlook.


CO.I.M.PRO S.R.L.: Liquidates Assets to Pay Debts
-------------------------------------------------
Buenos Aires-based Co.I.M.Pro S.R.L. will begin liquidating its
assets following the pronouncement of the city's civil and
commercial Court No. 9 that the Company is bankrupt, reports
Infobae.

The bankruptcy ruling places the Company under the supervision
of court-appointed trustee, Luis Gabriel Plizzo. The trustee
will verify creditors' proofs of claim until Sep. 5, 2005. The
validated claims will be presented in court as individual
reports on Oct. 24, 2005.

Mr. Plizzo will also submit a general report, containing a
summary of the Company's financial status as well as relevant
events pertaining to the bankruptcy, on Dec. 6, 2005.

The bankruptcy process will end with the disposal of the
Company's assets in favor of its creditors.

CONTACT: Mr. Luis Gabriel Plizzo, Trustee
         Roque Saenz Pena 651
         Buenos Aires


CREDICOOP COOPERATIVO: Moody's Ups LTFC Deposit Ratings
-------------------------------------------------------
Moody's Investors Service upgraded the long term foreign
currency deposit rating to Caa1 from Caa2 for Banco Credicoop
Cooperativo Limitado following Moody's upgrade of Argentina's
foreign currency ceiling for bank deposits to Caa1. Moody's also
raised the bank's National Scale foreign currency deposit
ratings to Ba1.ar from B1.ar. All the ratings have a stable
outlook.


ELITE S.R.L.: Trustee to Submit General Report
----------------------------------------------
Mr. Victor Osvaldo Lapuente, the trustee for the Elite S.R.L.
reorganization, will submit a general report on Aug. 24, 2005.

Infobae relates that the trustee was appointed by Court No. 3 of
Neuquen's civil and commercial tribunal after the court approved
the "concurso" motion of Elite S.R.L.

Mr. Lapu accepted the proofs of claim of the Company's creditors
until May 13, 2005. Based on the validated claims, he prepared
the individual reports and presented them in court on June 28,
2005.

Elite S.R.L. will endorse the settlement proposal, drafted from
the submitted claims, for approval by the creditors during the
informative assembly scheduled on March 3, 2006.

CONTACT: Mr. Victor Osvaldo Lapuente, Trustee
         Tierra del Fuego 326
         Neuquen


LOMA NEGRA: Brazilian Firm Signs Acquisition Deal
-------------------------------------------------
Construcoes e Comercio Camargo Correa SA, Brazil's fourth-
biggest cement producer, has inked a deal to buy Loma Negra,
Argentina's largest cement maker, for US$1.025 billion. The
figure, according to a Dow Jones Newswires report, includes
US$250 million in debt. The terms of the agreement were in line
with the letter of intent signed in late April.

Under the deal, Camargo-Correo will keep Loma Negra's nine
plants open as well as assume the Argentine company's 1,850
employees. Juliano de Oliveira, who was general manager of
Camargo-Correa's cement business, will be general manager of
Loma Negra.

Pending approval from Argentine regulators, the two sides have
agreed on a board of directors that combines officials from both
companies.

Loma Negra, which formerly belonged to Amalia Lacroze de
Fortabat, Argentine's richest woman, defaulted on about US$400
million of debt following the government's default. The Company
has restructured part of that debt by giving investors US$226
million of new bonds in 2003.


PAN AMERICAN ENERGY: Moody's Assigns Ba2 Global LC Rating
---------------------------------------------------------
Moody's Investors Service assigned a Ba2 global local currency
issuer rating to Pan American Energy LLC (PAE). This is the
first time Moody's is assigning a global local currency rating
to the company. PAE's Caa1 foreign currency issuer rating
remains constrained by Argentina's Caa1 long-term foreign
currency ceiling, as only ratings assigned to specific
securities can pierce a country ceiling under Moody's rating
policies. The rating outlook for PAE's local currency and
foreign currency ratings is stable.

PAE's Ba2 global local currency rating is supported by (1) PAE's
substantial oil and gas reserves and strong market share in
Argentina, (2) its position as a net exporter of oil and gas,
(3) its fairly long reserve life on proven developed reserves
and favorable oil production growth outlook, (4) its efficient
cost structure, (5) the benefits derived from its relationship
with its majority owner, BP plc (rated Aa1), and (6) its
conservative financial leverage. However, the Ba2 rating also
considers (1) PAE's geographic concentration, (2) its small
contribution to BP's worldwide hydrocarbon reserves and
production, (3) political risk and economic weakness in
Argentina and in Bolivia, with negative implications for natural
gas reserve replacement, (4) PAE's high proportion of proved
undeveloped reserves, (5) the potential for increases in its
unit full-cycle costs, and (6) the company's significant near-
term debt maturities.

Moody's stable outlook for PAE's Ba2 global local currency
rating assumes the company will continue to maintain
conservative financial leverage (below US$2/boe proven developed
reserves) as it seeks to grow its oil reserves and production.
The stable outlook for PAE's Caa1 foreign currency issuer rating
is consistent with Moody's stable outlook for Argentina's Caa1
sovereign ceiling. Moody's believes there is limited upside for
PAE's ratings at the present time. Over the longer term, a
reduction in government interference risk or improvement in
regional natural gas markets could have favorable local currency
rating implications, and an upgrade in Argentina's ceiling could
be positive for PAE's foreign currency issuer rating. Materially
higher unit full-cycle costs, increased financial leverage or a
downgrade in Argentina's Caa1 ceiling could pressure PAE's
ratings.

PAE is a holding company owned 60% by BP plc and 40% by Bridas
Corporation (not rated). With over 1.2 billion barrels of oil
equivalent (boe) of proven oil equivalent reserves (85% in
Argentina and 15% in Bolivia), PAE is Argentina's second-largest
oil and gas producer by volume, with about 11% of the country's
total hydrocarbon production. PAE is involved mainly in
exploitation, with limited exploration activity (mainly in the
Neuquen basin, offshore southern Argentina and Bolivia). The
company has exhibited healthy average oil and gas production
growth over the past four years. Management is currently focused
mainly on growing PAE's oil production and expanding its oil
reserves through development drilling, workovers, waterflooding
and extensions/step-outs. Regulations implemented during
Argentina's financial crisis constrain domestic natural gas
prices. Future development of PAE's gas reserves will depend
mainly on the evolution of local markets.

PAE has significant opportunities to grow its oil production
through low-risk development drilling and secondary recovery
(primarily waterflooding) in the Cerro Dragon contract area in
Argentina's Golfo San Jorge basin. The company also has
opportunities to grow its natural gas and condensate production
for export to Chile through development projects in the Austral
and Tarija basins. PAE is the operator in 7 out of 12 areas in
Argentina, including Cerro Dragon.

PAE is not highly diversified geographically, as 90% of its
hydrocarbon production and the majority of its reserves are
located in Argentina. Also, PAE's oil reserves and production
are concentrated in the Cerro Dragon contract area, although
Moody's notes that Cerro Dragon consists of many different
fields with over 1,800 wells at a wide range of well depths and
in various stages of exploitation maturity.

Political and economic instability and a high risk of government
interference in the oil and gas sectors of Argentina and Bolivia
(which recently delayed the Pacific LNG project) could have
negative implications for PAE's ability to book additional
proven natural gas reserves and may require some negative
reserve revisions, although Moody's does not expect such
revisions to be detrimental to the company's credit quality. The
company's natural gas production growth continues to be
constrained by economic weakness in Argentina and in Brazil.

PAE's reserve life on proved developed reserves of 8.2 years
compares favorably to the average for its international
independent oil and gas company peers, and its unit cash
operating costs (US$5.54/boe in 2003, including transportation
and export taxes) are competitive, despite a high tax burden
that includes a 20% tax on exports. On the other hand, the
company's unit price realizations on production are lower than
those of its peers as a result of price controls on natural gas,
as well as the current agreement between Argentine oil producers
and the government to cap domestic oil prices at
US$28.50/barrel. Furthermore, unit cash operating costs could
rise if the peso appreciates, as about 60% of the company's cost
base is domestic.

PAE's proved undeveloped reserves account for about 50% of its
total proven reserves, higher than for most of its peers.
However, this risk is mitigated by PAE's relatively low 3-year
weighted average unit finding & development costs (US$2.39/boe
in 2003). Moody's believes Cerro Dragon will provide attractive
opportunities to grow production and reserves at fairly low
costs, although unit full-cycle costs (cash operating and
finding and development costs per unit of production) could
increase over time as new infrastructure is added to expand
waterflooding and to install additional pumping units to
maintain reservoir pressure.

PAE benefits from BP's technical knowledge, administrative
management and corporate governance. While Argentina is not
considered a core area for BP (it accounts for only 3% of BP's
worldwide hydrocarbon production), PAE should remain an
attractive investment for BP over the next five years due to the
attractive oil production and reserve growth opportunities in
Cerro Dragon. In Moody's view, PAE's value to BP longer term
will depend on developments in the regional natural gas market.

PAE's financial performance has remained strong during the
Argentine economic crisis. The company has continued to meet its
payment obligations on foreign currency debt and has
successfully issued dollar bonds in the local market. A
government decree that allows Argentine oil and gas companies to
keep 70% of their export proceeds offshore provides the company
with an additional source of foreign exchange. PAE exports about
40% of its crude oil production (Escalante, a heavy sweet crude)
mainly to supply refineries on the US West Coast. BP is the
company's largest customer for crude oil exports.

PAE's debt levels are conservative (US$1.11 of adjusted debt per
barrel of proven developed reserves), and Moody's is relying on
management's statement that it is committed to maintaining PAE's
credit quality. During 2003, the company generated cash flow
(US$542 million of cash flow from operations before working
capital and after distributions) sufficient to cover all of its
cash needs. Moody's believes that the company will be able to
fund its 2004 capital budget of approximately US$448 million
with internal cash flow. Committed revolving credit facilities
are not available in Argentina today, but the company maintains
excess liquidity from internal sources to cover contingencies.
PAE is in compliance with all of its financial covenants. Near-
term debt maturities are significant (US$120 million in 2004 and
US$180 million in 2005). Moody's ratings assume the company will
continue to have access to the capital markets to refinance
maturing debt obligations.

Pan American Energy LLC engages in the exploration and
production of oil and gas in the Southern Cone region of South
America and in Bolivia and is headquartered in Buenos Aires,
Argentina.


ROSEPA S.A.: Concludes Reorganization
-------------------------------------
The reorganization of Buenos Aires-based Rosepa S.A. has ended.
Data revealed by Infobae on its Web site indicated that the
process was concluded after the city's civil and commercial
Court No. 14, with assistance from Clerk No. 28, made official
the debt agreement signed between the Company and its creditors.

CONTACT: Rosepa S.A.
         Buenos Aires


YPF: Moody's Upgrades Foreign Currency Issuer Rating To B3
----------------------------------------------------------
Moody's Investors Service upgraded Thursday the foreign currency
issuer rating of YPF S.A. to B3 from Caa1. The rating action
follows Moody's decision yesterday to upgrade Argentina's
foreign currency country ceiling to B3 from Caa1. YPF's foreign
currency issuer rating is constrained by the foreign currency
country ceiling of Argentina.

Moody's has also upgraded the senior unsecured ratings of YPF
and of Maxus Energy, which is guaranteed by YPF, to Ba2 from
Ba3. The decision reflects Moody's view of the likelihood of a
debt moratorium being imposed by the Argentinean government, and
the likelihood of YPF being caught up in such a moratorium.
While the former remains high at the current B3 sovereign
rating, Moody's believes that the likelihood is low of YPF being
subject to any debt moratoria.

YPF's Baa2 domestic currency issuer rating remains unchanged.
All ratings have a stable outlook.

Moody's last rating action on YPF was on 16th June 2005, when it
changed its local currency issuer rating to Baa2 from Baa3 and
its senior unsecured debt ratings to Ba3 from B1 following an
upgrade of Repsol YPF, its parent company.

YPF S.A. is the largest oil & gas company in Argentina,
accounting for around 40% of the country's hydrocarbon reserves
and close to half of its production. YPF is well integrated,
given that it is also the region's largest refiner with total
refining capacity of 330,000 barrels of oil equivalent (boe) per
day. YPF is owned by Spain's Repsol YPF S.A., which is rated
Baa1 with a stable outlook by Moody's.


* ARGENTINA: IMF Board Concludes 2005 Article IV Consultation
-------------------------------------------------------------
On June 20, 2005, the Executive Board of the International
Monetary Fund (IMF) concluded the Article IV consultation with
Argentina

Background

Argentina's economy has rebounded strongly from the financial
crisis in late 2001. Reflecting buoyant domestic demand, real
GDP grew close to 9 percent in both 2003 and 2004 bringing real
output level back to the peak level achieved prior to the
crisis. From early 2003, confidence rose steadily, and both
private consumption and investment rebounded. Export receipts
have increased-initially reflecting higher commodity prices-and
imports remain below pre-crisis levels. International reserves
have recovered, and bank deposit and external payments
restrictions have been progressively dismantled.

The robust resurgence in money demand was a key aspect of the
recovery. Inflation-after spiking in 2002-remained moderate
(reaching only 3_ percent in 2003 and 6 percent in 2004) despite
the almost 300 percent depreciation of the currency. Given the
softness of labor markets and a freeze on public service prices,
real wages recovered only slowly and the real exchange rate
remains somewhat depreciated.

Fiscal performance was strong in 2003 and 2004, mainly as a
result of improvements in tax administration and robust economic
activity. The consolidated primary surplus reached 3.0 percent
and 5.1 percent of GDP in 2003 and 2004, respectively, as total
revenues rose from 23 percent of GDP in 2002 to 29 percent of
GDP in 2004. The strengthening of tax administration and strong
VAT and income tax collection were important factors behind the
fiscal performance, but distortive taxes (export and financial
transactions taxes) also account for close to 20 percent of
total revenues. Social and capital spending accelerated towards
the end of 2004, resulting in end-year expenditures exceeding
original budget targets by considerable margins.

Social indicators began to improve from end-2002 at a steady,
but gradual pace. The headline unemployment rate fell to about
13 percent in March 2005 from 17.8 percent in December 2002,
although an additional 4.1 percent of the labor force is
employed under emergency social assistance programs. The share
of the population living in extreme poverty fell to 17 percent
in June 2004 (from 24.8 percent two years earlier) and the share
of the population below the poverty line declined from a peak of
58 percent to 44 percent in June 2004.

During the first part of 2005, economic conditions have remained
generally favorable. Growth has continued in the first quarter
(at 8 percent year-on-year) and consumer and business confidence
indicators remain at high levels. Inflation, however, has
accelerated amid rising demand, increased capacity constraints,
growing wage pressures and monetary accommodation; consumer
prices rose by 5.2 percent during the first five months of 2005,
bringing the 12-month inflation rate to 8.6 percent. A strong
trade balance and a significant reduction in private capital
outflows have facilitated a sharp rise in international reserves
to over US$22 billion.

The approved budget for 2005 aims for a consolidated primary
surplus of 3.8 percent of GDP on a cash basis. During the first
five months of 2005, the federal government achieved a primary
surplus of 1.9 percent of annual GDP.

Monetary policy has moved toward a tightening phase. Since
January 2005, the central bank increased its policy interest
rates on three occasions by a total of 125 basis points,
bringing the repo rate to 3.75 percent, and has increased
steadily the interest rates it pays on short-term Lebacs.
However, renewed foreign exchange interventions since April have
contributed to an acceleration in base money.

Argentina's global debt exchange offer was launched in January
2005 and closed on February 25 with a 76 percent participation
level. As a result of the debt restructuring, Argentina's debt
burden has declined to 72 percent of GDP (from 147 percent of
GDP in 2002) and the debt service profile has improved
considerably. Nonetheless, approximately US$20 billion in
principal in default remains outstanding. The settlement of the
debt exchange was completed on June 2 due to a delay resulting
from legal action by some nonparticipating creditors to attach
the tendered bonds.

Executive Board Assessment

Executive Directors noted that Argentina is emerging from a
difficult period in its history, and has made a strong recovery
from the 2001 financial crisis. Directors recognized, however,
that, while much has been accomplished, many challenges lie
ahead. They noted that the current growth momentum and
accompanying political stability provide a critical window of
opportunity for the government to leave the crisis behind and
undertake the policies-committed to in 2003 under the current
stand-by arrangement-that would ensure long-lasting and
equitable growth.

Directors emphasized that, for the recovery to be sustained, the
authorities need to take action on a number of fronts: to
continue with responsible macroeconomic policies, guarding
particularly against inflation; to undertake structural reforms
that will boost factor productivity and raise potential growth
above its historic rate; to strengthen the financial system and
revive intermediation; to normalize relations with creditors;
and to ensure that the fruits of growth are equitably shared and
that the still vulnerable sections of the community are
adequately protected.

Directors noted that prudent macroeconomic policies in 2003-04
have provided an anchor for the recovery of confidence. They
commended the authorities for their steadfast implementation of
fiscal policy, which produced record levels of primary surplus
and demonstrated the potential for Argentina to move away from
its high level of national indebtedness. Directors congratulated
the authorities on achieving two years of low inflation, which
was key to the recovery process. Monetary policy has taken
advantage of resurging demand for pesos to rebuild international
reserves while keeping both interest rates and inflation low.

Directors noted, however, that the macroeconomic policy stance
could weaken in 2005 relative to 2004, at a time when the output
gap is closing and inflationary pressures are mounting. They
urged the authorities to tighten both fiscal and monetary
policies to contain inflation. They also cautioned that the
authorities' efforts to apply moral suasion and administrative
measures to stabilize prices are unlikely to be effective and
could have adverse consequences on the investment climate.

Directors noted that the primary surplus target of 3.8 percent
of GDP in the 2005 budget represents a sizeable injection of
fiscal stimulus, but welcomed indications that the target might
be exceeded again this year. They urged the authorities to put
in place measures to ensure the achievement of a higher primary
surplus, preferably closer to the level achieved in 2004,
particularly in the event that revenues are higher than
expected. While recognizing that the government has over-
performed its primary fiscal surplus target during the first
five months of 2005, Directors noted that further fiscal
consolidation is needed to avoid a budgetary financing gap from
arising in the second half of 2005, and emphasized the need to
maintain tight expenditure for the rest of the year.

Directors welcomed the authorities' recent efforts to raise
interest rates, but believed that additional tightening would be
desirable. They recommended that base money be brought to the
lower end of the authorities' target range, which could require
reduced foreign exchange intervention and a further rise in
interest rates. A number of Directors also cautioned against the
inflationary risks of using monetary policy to pursue exchange
rate stability, and recommended that the authorities clarify
their commitment to price stability as the prime objective of
monetary policy, while a few Directors stressed that the central
bank needs to have the necessary operational autonomy to
effectively combat inflation. In this context, most Directors
called for a greater degree of nominal exchange rate
flexibility, while noting that the government's foreign exchange
market intervention policy should be transparent, and stressing
that competitiveness is best achieved through structural reforms
and prudent macroeconomic policies. A few Directors also
cautioned against the use of capital controls as a means to
resist upward pressures on the exchange rate.

Directors called for the steadfast implementation of key
structural reforms committed to by the government under the
Fund-supported program. They urged the authorities to take
advantage of the current favorable situation to implement
structural measures that had been committed to under the current
stand-by arrangement. A few Directors also noted the importance
of strong ownership and careful sequencing of such reforms.

Directors noted, in particular, that structural fiscal reforms
are crucial to sustain strong budgetary performance and enhance
growth prospects over the medium term. They commended the
authorities for the progress in restoring fiscal prudence and
restraining overspending by the provinces. Nevertheless, most
Directors underscored the importance of strengthening the
institutional fiscal framework, including the Fiscal
Responsibility Law, while acknowledging the political
constraints facing the authorities. A few Directors also called
for the establishment of clear rules to reinforce the role of
the Federal Council for Fiscal Responsibility. They called for
more binding constraints on provincial spending and borrowing,
less discretion of federal financing to provinces, better
coordination of fiscal policies across levels of government,
increased budgetary transparency and consistent accounting
standards at the provincial level, and more equitable and stable
intra-governmental revenue sharing. In that context, a few
Directors highlighted the constitutional difficulties faced by
the authorities in advancing the recommended structural and
fiscal reforms. Directors called for a phasing-out of
distortionary taxes on exports and financial transactions, and a
few emphasized that this measure should be revenue neutral and
that it should not increase the share of revenues to the
provinces at the expense of those of the central government.

Directors welcomed the progress in implementing the banking
sector recovery strategy developed in 2003. They commended the
authorities for maintaining the supervisory and regulatory
framework under very difficult circumstances, while noting that
considerable temporary regulatory forbearance has been extended.
Directors emphasized, however, that the banking system remains
vulnerable and undercapitalized relative to international
standards, and that several issues remain pending, in particular
with regard to the compensation for policy-induced losses and
the judicial clarification of losses from amparos. Directors
stressed the need to ensure that prudential standards are
applied strictly, including the announced regulatory phase-in of
market valuation of government bonds and limits to bank exposure
to the public sector. At the same time, Directors recommended
that incentives for early recapitalization of banks be
strengthened. They also noted the expanding role of public banks
and urged the authorities to articulate a strategy which would
clarify the role of the public sector in the banking system
going forward.

Directors observed that the situation in the regulated utilities
sector is not sustainable, and that failure to resolve
outstanding issues would have damaging consequences for
macroeconomic stability, the investment climate, and future
growth. Directors urged the authorities to quickly reach
collaborative long-term agreements with the utility
concessionaires that would ensure an appropriate economic return
and adequate future investment in the sectors, as committed to
in the current Fund-supported program. Directors also stressed
the importance of putting in place, at an early date, an updated
regulatory framework that would provide regulatory certainty and
find an appropriate balance between protection of consumers and
provision of necessary investment incentives.

Directors viewed the recently completed debt exchange as an
important step toward normalization of relations with creditors.
They stressed that for Argentina to emerge fully from the
financial crisis and regain access to capital markets, the
authorities need to develop a forward-looking strategy to
resolve remaining arrears outstanding to private creditors
consistent with the Fund's Lending into Arrears policy.
Directors also noted the need to normalize relations with
bilateral official creditors through a Paris Club agreement, and
to maintain regularized relations with the European Investment
Bank.

Directors emphasized that debt sustainability for Argentina will
require a steadfast implementation of fiscal and structural
policies. They noted that only under a proactive reform
scenario, including a high and sustained fiscal effort, would
the debt-to-GDP ratio return to more comfortable levels over the
medium term and allow an early exit from the use of Fund
resources.

Most Directors considered appropriate that the authorities
should have the flexibility to draw on their international
reserves to finance the significant levels of debt service,
including repurchases to the Fund, that fall due in the near
term, while some Directors raised questions regarding the use of
international reserves for this purpose. They noted that it
would be important for the use of reserves to be made in a
manner that does not impair the financial soundness or autonomy
of the central bank.

The Executive Board also discussed the issue of arrears to the
European Investment Bank (EIB) which arose in 2003 and caused
nonobservance of continuous performance criteria under the
standby arrangements of January 2003 and September 2003. The
misreporting of these arrears gave rise to five noncomplying
purchases, and breaches of obligation under Article VIII,
Section 5 of the Fund's Articles of Agreement. On December 10,
2004 Argentina cleared these arrears to the EIB. On the basis of
this corrective measure, the Executive Board granted waivers of
the nonobservances of the performance criteria underlying the
misreporting and agreed that no further remedial action was
warranted with respect to the breaches of Article VIII, Section
5.

CONTACT:  INTERNATIONAL MONETARY FUND
          700 19th Street, NW
          Washington, D.C. 20431 USA

          IMF EXTERNAL RELATIONS DEPARTMENT
          Public Affairs: 202-623-7300 - Fax: 202-623-6278
          Media Relations: 202-623-7100 - Fax: 202-623-6772


* BUENOS AIRES: Moody's Upgrades Foreign Currency Rating to B3
--------------------------------------------------------------
Moody's Investors Service has upgraded to B3 (from Caa1) the
foreign currency debt rating of the City of Buenos Aires
following a similar upgrade of Argentina's foreign-currency
country ceiling for bonds and notes. Moody's also assigned a
rating of A3.ar (Argentina National Scale) to the City's foreign
currency debt. The City's foreign currency debt rating is
constrained by Argentina's foreign-currency country ceiling.

Last week, Moody's upgraded the domestic currency debt ratings
of the City of Buenos Aires to B1 (Global Scale) and Aa2.ar
(Argentina National Scale), based on the City's continuing
economic and fiscal recovery, and budget practices that
contribute to financial flexibility.



=============
B E R M U D A
=============

FOSTER WHEELER: Launches New Equity-for-Debt Exchange
-----------------------------------------------------
Foster Wheeler Ltd. (Nasdaq: FWLT) announced Thursday that it
has launched an exchange offer for all outstanding shares of its
9.00% Trust Preferred Securities.

Under the terms of the offer, the Company is offering to
exchange 2.16 of its common shares for each Trust Preferred
Security. The number of 9.00% Trust Preferred Securities
currently outstanding is 2,847,086. The number of common shares
currently outstanding is 44,824,972. The offer will expire at
5:00 p.m. New York City time on July 29, 2005, unless extended.

"This exchange is expected to be accretive to earnings per share
for 2005 and 2006, excluding the possible one-time accounting
charge and offering expenses described below," said Raymond J.
Milchovich, chairman, president and chief executive officer.

Agreements have been executed with the holders of 1,391,522 of
the Company's Trust Preferred Securities (48.9% of the Trust
Preferred Securities outstanding), committing such holders to
tender in the exchange offer.

"This is another step in our ongoing strategy to reduce leverage
and therefore improve the relative competitive position of
Foster Wheeler," added Mr. Milchovich. "An exchange for all
Trust Preferred Securities would result in the following pro
forma effects to our April 1, 2005 balance sheet:

- A reduction of $71.2 million in consolidated debt;

- An improvement to consolidated net worth of $92.8 million; and

- The elimination of $25.5 million of deferred interest, which
would accrete to a cash payment of $42.3 million due in January
2007."

The exchange may also result in a one-time, non-cash, accounting
charge depending on the number of Trust Preferred Securities
tendered and the market value of Foster Wheeler's common shares
exchanged at the time of closing of the offer. The charge would
be recorded in the third quarter of 2005 and would approximate
$10.6 million for a transaction involving the Trust Preferred
Securities covered by the executed Agreements described above
and assuming the June 29, 2005 closing price of Foster's
Wheeler's common shares. The Company has incurred exchange-
related expenses of approximately $1.6 million, most of which
will be reflected in the Company's second quarter 2005 results.

This exchange is being conducted pursuant to Section 3(a)(9) of
the Securities Act of 1933. Section 3(a)(9) applies to an
issuer's exchange of a security with its existing security
holders where no commission or other remuneration is paid for
soliciting such exchange.

A copy of the Offer to Exchange and other documents relating to
this exchange offer may be obtained from Morrow & Co., Inc., the
Information Agent for this exchange offer. Morrow's telephone
number for bankers and brokers is 800-654-2468 and for all other
security holders is 800-607-0088. Contact the Information Agent
with any questions on the exchange offer.

Individuals holding their securities through brokers are urged
to contact their brokers to receive a copy of the Offer to
Exchange and other documents related to the exchange offer.

Investors and security holders are urged to read the Schedule TO
filed with the SEC, as amended from time to time, relating to
the exchange offer because it contains important information.
This Schedule and any other documents relating to the exchange
offer, when they are filed with the SEC, may be obtained free at
the SEC's Web site at www.sec.gov, or from the information agent
as noted above.

The foregoing reference to the exchange offer and any other
related transactions shall not constitute an offer to buy or
exchange securities or constitute the solicitation of an offer
to sell or exchange any securities in Foster Wheeler Ltd. or any
of its subsidiaries.

Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering,
construction, manufacturing, project development and management,
research and plant operation services. Foster Wheeler serves the
refining, upstream oil and gas, LNG and gas-to-liquids,
petrochemicals, chemicals, power, pharmaceuticals, biotechnology
and healthcare industries. The corporation is based in Hamilton,
Bermuda, and its operational headquarters are in Clinton, New
Jersey, USA.

CONTACT: Foster Wheeler Ltd.
         Media:
         Maureen Bingert
         Phone: 908-730-4444
                 or
         Investors:
         John Doyle
         Phone: 908-730-4270
                 or
         Other Inquiries:
         Phone: 908-730-4000
         URL: http://www.fwc.com


LEADING SPIRIT: Court Appoints Provisional Liquidators
------------------------------------------------------
IN THE MATTER OF THE COMPANIES ACT 1981

                  and

IN THE MATTER OF Leading Spirit High-Tech (Holdings)
              Company Limited

Messrs. Edward S Middleton and Jack CW Muk of 27/F Alexandra
House, 16-20 Chater Road, Hong Kong and Malcolm L Butterfield of
Crown House, Par-La-Ville Road, Hamilton in the Islands of
Bermuda, have been appointed Joint Provisional Liquidators of
Leading Spirit High-Tech (Holdings) Company Limited by order of
the Supreme Court dated June 2, 2005.

CONTACT: Messrs. Edward S Middleton and Jack CW Muk, Liquidators
         27/F Alexandra House
         16-20 Chater Road
         Hong Kong

         Mr. Malcolm L Butterfield, Liquidator
         Crown House
         Par-La-Ville Road, Hamilton
         Bermuda


LORAL SPACE: New Plan Supplement Details Post Reorg Deals
---------------------------------------------------------
Loral Space & Communications Ltd. filed Wednesday with the
Bankruptcy Court a Plan Supplement to the previously filed
Fourth Amended Joint Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code dated June 3, 2005 of Loral Space &
Communications Ltd., et al. (the "Plan of Reorganization").

The Plan Supplement contains forms of certain documents
(collectively, the "Plan Documents") to be executed, delivered,
assumed and/or performed in conjunction with the consummation of
the Plan of Reorganization on the effective date of the Plan,
including, among others, forms of the following documents:
certificates of incorporation and bylaws for reorganized Loral
("New Loral") and certain of its subsidiaries, the certificate
of designation of the $200 million Series A Non-Convertible
Preferred Stock to be issued by New Loral's reorganized fixed
satellite services subsidiary ("New Skynet"), the indenture and
form of note for the $126 million 14% Senior Secured Cash/PIK
Notes due 2015 to be issued by New Skynet, a registration rights
agreement to be entered into by New Loral, New Skynet and
certain holders of New Loral common stock or New Skynet
preferred stock or notes, the 2005 stock incentive plan for New
Loral, employment contracts for the Chairman and Chief Executive
Officer of New Loral and certain other executives and an
amendment to Loral's Supplemental Executive Retirement Plan.

In addition, the Plan Supplement contains a list of subsidiaries
that will be merged or dissolved and assets to be transferred in
connection with the reorganization, a schedule of executory
contracts and unexpired leases to be assumed and a list of
debtor subsidiaries the organizational documents of which are
not being revised. A copy of the Plan Supplement may be obtained
from the Bankruptcy Court's website located at
http://www.nysb.uscourts.govor at http://www.bsillc.com.

CONTACT: Loral Space & Communications Ltd.
         600 Third Avenue
         New York, NY 10016
         USA
         URL: http://www.loral.com
         Phone: 212-697-1105


LORAL SPACE: Management Incentive Bonus Program Approved
--------------------------------------------------------
The Compensation Committee of the Board of Directors of Loral
Space & Communications Ltd. approved on June 28, 2005 the
Management Incentive Bonus Program for corporate office
participants, including the named and other executive officers,
for the fiscal year ending December 31, 2005.

Under this program, participants are entitled to receive an
Annual Bonus for 2005 equivalent to a percentage (the "Target
Bonus") of such participant's base salary if the Company
achieves an established EBITDA performance target ("Target
EBITDA"). For purposes of this program, actual EBITDA may be
adjusted by the Compensation Committee after the fiscal year end
for non-recurring or unusual items ("Adjusted EBITDA").

For the year ending December 31, 2005, Target EBITDA was
established at $17.7 million, which is equivalent to the EBITDA
set forth in the Company's 2005 operating plan that has been
approved by the Board of Directors and set forth in the
Company's Disclosure Statement for the Fourth Amended Joint Plan
of Reorganization Under Chapter 11 of the Bankruptcy Code dated
June 3, 2005 of Loral Space & Communications Ltd., et al. (the
"Plan of Reorganization").

The amount of the Annual Bonus payable to a participant shall be
determined by comparing Adjusted EBITDA to Target EBITDA as
follows:

If Adjusted EBITDA is......................The Annual Bonus paid
shall be (as a percentage of Target Bonus)
$35.4 million...............................130%
$26.6 million...............................115%
$17.7 million...............................100%
$8.9 million.................................85%
$2.0 million.................................70%

For Adjusted EBITDA amounts in between the percentages in the
table above, the Annual Bonus shall be determined by linear
interpolation.

If Adjusted EBITDA is greater than $35.4 million, the
Compensation Committee, upon the recommendation of the Chief
Executive Officer, shall have the discretion to award the
Executive an Annual Bonus greater than the Annual Bonus
determined above. If Adjusted EBITDA is less than $2.0 million,
the Compensation Committee, upon the recommendation of the Chief
Executive Officer, shall have the discretion to award the
Executive an Annual Bonus in an amount to be determined by the
Compensation Committee.

In addition, the Compensation Committee may, upon the
recommendation of the Chief Executive Officer, increase a
participant's Target Bonus based on exceptional contribution. If
the Company's Plan of Reorganization is confirmed and declared
effective, the Chief Executive Officer shall consult with the
Vice Chairman as to any of his recommendations.

The Target Bonus percentage established by the Compensation
Committee for each of Bernard L. Schwartz, Eric J. Zahler,
Richard J. Townsend and Avi Katz was 42.5%, 40%, 41% and 40%,
respectively.

Mr. C. Patrick DeWitt, President of Space Systems/Loral, Inc.,
participates in SS/L's bonus program. Under that program, the
amount of the annual bonus payable to Mr. DeWitt shall be
determined based on SS/L's EBITDA achieved for 2005 as follows:

If SS/L 2005 EBITDA is.........................The Annual Bonus
paid shall be (as a percentage of Base Salary)
$0 million......................................40%
$3.2 million....................................45%
$8.2 million....................................50%
$13.2 million...................................55%
$18.2 million...................................60%

On July 15, 2003, Loral Space & Communications Ltd. and certain
of its subsidiaries filed voluntary petitions for reorganization
under chapter 11 of title 11 of the United States Code in the
United States District Court for the Southern District of New
York and parallel insolvency proceedings in the Supreme Court of
Bermuda in which certain partners of KPMG were appointed as
joint provisional liquidators.

CONTACT: Loral Space & Communications Ltd.
         600 Third Avenue
         New York, NY 10016
         USA
         URL: http://www.loral.com
         Phone: 212-697-1105


SAGAX II FUND: Creditors Advised to Submit Claims
-------------------------------------------------
IN THE MATTER OF THE COMPANIES ACT 1981

                  and

  IN THE MATTER OF Sagax II Fund Ltd.

Creditors of Sagax II Fund Ltd., which is being voluntarily
wound up, are required on or before July 22, 2005, to send their
full Christian names, their addresses and descriptions, full
particulars of their debts or claims, and the names and
addresses of their lawyers (if any) to the Official Receiver,
the Liquidator of the said Company, and if so required by notice
in writing from the said Liquidator, and personally or by their
lawyers, to come in and prove their debts or claims at such time
and place as shall be specified in such notice, or in default
thereof they will be excluded from the benefit of any
distribution made before such debts are proved.

CONTACT: Official Receiver
         Government Administration Building
         30 Parliament Street
         Hamilton HM 12



=============
B O L I V I A
=============

BANCO NACION (BOLIVIA): Moody's Upgrades Deposit Ratings
--------------------------------------------------------
Moody's Investors Service upgraded the long term foreign and
local currency deposit ratings of Banco de la Nacion Argentina
(Bolivia) to Caa1 from Caa2.

The rating action followed the upgrade of its head office Banco
de la Nacion Argentina's foreign currency deposit ratings to
Caa1. The outlook on the ratings is stable.

As a result of this rating action, Moody's also upgraded the
National Scale ratings for foreign currency and local currency
deposits of Banco de la Nacion Argentina (Bolivia) to A2.bo from
Baa2.bo.



===========
B R A Z I L
===========

BANCO SAFRA: Fitch Affirms Ratings
----------------------------------
Fitch Ratings, the international rating agency, affirmed
Thursday Brazil-based Banco Safra S.A.'s ("Safra") ratings as
follows:

- Long-term foreign currency rating: 'BB-'(BB minus), with a
Stable Outlook
- Long-term local currency rating: 'BB', with a Stable Outlook
- Short-term foreign and local currency rating: 'B'
- Individual rating: 'C'
- Support rating: '4'
- National Long-term rating 'AA-(AA minus)(bra)', with a Stable
Outlook
- National Short-term rating 'F1+(bra)'

The ratings reflect Safra's capacity to successfully anticipate
and adapt to market changes and the volatility of the Brazilian
economy. This is attributed to centralised control by
experienced and stable senior management. Quick decisions by
management, a deep knowledge of borrowers, and unusually good
controls on collateral flows, are strong traits copied by many
competitors. The foreign currency ratings are at Brazil's
sovereign ceiling, while the local currency ratings are higher
than Brazil's sovereign rating. The latter reflects Safra's
consistent performance and balance sheet strength and management
capacity, which have allowed the bank to manage turbulent
economic cycles, all factors inherent in the bank's Individual
rating.

Note:

Fitch support and individual ratings for banks: Fitch's
Individual ratings assess how a bank would be viewed if it were
entirely independent and could not rely on external support. Its
support ratings for banks deal with the question of whether a
bank would receive support from its owners or from the state if
it were to get into difficulty. These ratings are not debt
ratings but rather, respectively, an assessment of the intrinsic
strength of a bank and of any level of outside support that may,
or may not, be available to it.

Fitch's national ratings provide a relative measure of
creditworthiness for rated entities in countries where the
sovereign's foreign and local currency ratings are below 'AAA'.
National ratings are not internationally comparable since the
best relative risk within a country is rated 'AAA' and other
credits are rated only relative to this risk. They are signified
by the addition of an identifier, for the country concerned,
such as 'AAA (bra)' for national ratings in Brazil.

CONTACTS: Rafael Guedes, Sao Paulo,
          Tel: +5511 4504 2600
          
          Maria Rita Goncalves, Rio de Janeiro
          Tel: +5521 4503 2600l

          Peter Shaw, New York
          Tel: +212 908 0553

MEDIA RELATIONS: Jaqueline Ramos de Carvalho, Rio de Janeiro
                 Tel: +55-21-4503-2623

                 Jon Laycock, London
                 Tel: +44 20 7417 4327.


BANCO VOTORANTIM: Places $125M, 3-Year Overseas Bond Issue
----------------------------------------------------------
Banco Votorantim closed Thursday its US$125 million debt sale of
three-year bonds, up US$25 million from its original offer due
to strong investor appetite. The bank, a unit of the industrial
conglomerate Grupo Votorantim, said the 36-month floating-rate
notes will pay interest at 125 basis points over the Libor
quarterly interest rate, which was at the higher end of
expectations.

Banco Pactual coordinated the sale.

Credit ratings agency Standard & Poor's assigned its BB-
foreign-currency credit rating to the bond issue, citing
potential risks associated with the bank's treasury business and
its exposure to the Brazilian government's sovereign risk.


ELETROPAULO METROPOLITANA: Secures Approval to Raise Rates 2.25%
----------------------------------------------------------------
Power regulator Aneel authorized a 2.25% average annual price
adjustment for electric power utility Eletropaulo Metropolitana
de Eletricidade. The adjustment, which will take effect today,
is lower than the 18.9% adjustment granted last year due to a
reduction in uncontrollable costs known as parcel A, which
includes foreign exchange variations and inflation, and the
removal from the rate increase calculation of federal PIS and
Cofins taxes, Eletropaulo said in a statement.

While parcel A costs in the 12 months ending July 4 2005 grew
1.54%, they rose 19.9% in the same period of 2004, mainly
because the Brazilian real appreciated through July 2005 but
devalued in the same period ending July 2004. The inflation rate
also fell in the same-period comparison.

In last year's rate adjustment, federal taxes were included in
the adjustment but not in this year's increase. Although
consumers will continue to pay the taxes, they will be made
explicit in the bills.

"This makes it more transparent for the consumer and makes us
happy that he/she will know exactly what they are paying for,"
Eletropaulo CEO Eduardo Bernini told analysts Thursday.

Eletropaulo is Brazil's largest power distributor, distributing
power to 16 million people in Sao Paulo city and 23 surrounding
towns. The company is owned by power holding group Brasiliana,
in turn controlled by US power company AES (NYSE: AES) with a
51% stake and national development bank BNDES with a 49% stake.

CONTACT: Eletropaulo Metropolitana Eletricidade de Sao Paulo S/A
         Investor Relations Manager
         Ms. Clarice Silva Assis
         E-mail: clarice.assis@aes.com
         Phone:(55 11) 2195-2229
         Fax:(55 11) 2195-2503


LOCALIZA RENT: To Start Paying Dividends July 14
------------------------------------------------
Localiza Rent A Car S.A. (Bovespa: RENT3), the largest car
rental network in Latin America with 32 years of existence,
informs shareholders that on July 14, 2005, it will start paying
interest on own capital totaling R$12,015,686.22, and
corresponding to R$0.192443 per share, as decided at the
Company's Board of Directors meeting on June 27, 2005. The
interest on own capital will be paid with a 15% withholding tax
deduction, resulting in R$0.163576 net interest per share,
except in the case of shareholders who can prove to be exempt
from such deduction.

The payment of interest on own capital will have as a reference
date the stock position on June 30, 2005, and the company's
shares will be negotiated "ex" over this interest on own capital
beginning on July 1, 2005.

WHERE AND HOW THE PAYMENT WILL BE MADE

The payment of these proceeds will be made by a deposit in the
shareholder's banking account, according to information provided
by each of them to Banco Bradesco S.A, the depository financial
institution of shares issued by the Company.

The interest on own capital related to the shares under the
custody of CBLC - Companhia Brasileira de Liquidacao e Custodia,
will be paid to the aforementioned company and then transferred
to the shareholders through Depositary Brokers.

In order to receive the due interest on own capital,
shareholders should go to a Banco Bradesco S.A agency bearing
the following documents:

Individuals: authenticated copy of ID and Individual Tax
Registration cards.

Corporations: authenticated copy of Corporate Taxpayer ID
(CNPJ/MF), consolidated and up-to-date bylaws, as well as the
minutes for the election of the Board of Directors. Manager-
partner or Officers entitled to represent the company should
present an authenticated copy of the ID and Individual Tax
Registration cards. In case the company is represented by a
proxy, it will be necessary to present the respective power of
attorney document and authenticated copies of the ID and
Individual Tax Registration cards of the proxy (ies).

The shareholders whose addresses are duly registered at Banco
Bradesco S.A. will receive the "Notice for the Receipt of Shares
Proceedings," which should also be presented to Banco Bradesco
S.A..

About Localiza Rent a Car S.A.

Localiza operates in the car rental and fleet rental business
and in the fleet management and franchising of those businesses.
Thirty-two years in existence and with 299 agencies, Localiza is
currently the largest car rental company in Latin America in
number of agencies and the pioneer in fleet management business
in Brazil. Localiza is part of BOVESPA's Novo Mercado and is
listed under the ticker "RENT3".

CONTACT:  LOCALIZA RENT A CAR S.A.
          Investors: Silvio Guerra
          Tel: +011-5531-3247-7055
          E-mail: ri@localiza.com

          Media: Priscilla Duarte
          Tel: +011-5531-3247-7879
          Fax: +011-5531-3247-7684
          E-mail: priscila@localiza.com


PARMALAT BRAZIL: Ordered to Formulate Plan Within 2 Months
----------------------------------------------------------
A Sao Paulo judge ordered the local unit of cash-strapped
Italian dairy producer Parmalat to file a reorganization plan
with the court within 60 days, reports Dow Jones Newswires.
The judge ordered the subsidiary, which holds debts of
approximately BRL2.35 billion, to draw up a business plan
including methods and timetables for paying creditors.

The Company will have to drawn up the plan and present it under
the provisions of Brazil's new bankruptcy law, which went into
effect earlier this month. The plan must be approved by the
bankruptcy judge and by creditor representatives.

The unit filed for bankruptcy in 2003 in the wake of a financial
crisis in the Italian parent company.


TCP: Board Okays Capital Stock Increase
---------------------------------------
The Board of Directors of Telesp Celular Participacoes S.A.
approved an increase of its capital stock as a consequence of
the corporate restructuring process concluded at AGE (Special
Meeting of Shareholders) held on January 14, 2000, involving the
Company and its controlled and controlling companies.

The amortization of the premium arising out of the corporate
restructuring process resulted in a tax benefit of
R$242,595,157.06, representing a credit to controlling
shareholder Portelcom Participacoes Ltda., to be used for
increase of the capital stock of the Company from
R$6,427,557,341.20 to R$6,670,152,498.26, upon issuance of
29,298,932 new common shares, with due regard to the preemptive
right set forth in article 171 of Law no. 6404/76, provided that
the funds arising out of eventual exercises of the preemptive
right shall be credited to Portelcom Participacoes Ltda.

TOTAL AMOUNT OF SHARE SUBSCRIPTION AND INCREASE OF CAPITAL

Two hundred and forty-two million, five hundred and ninety-five
thousand, one hundred and fifty-seven reais and six cents
(R$242,595,157.06).

NUMBER AND TYPE OF SHARES TO BE ISSUED

Twenty-nine million, two hundred and ninety-eight thousand, nine
hundred and thirty-two (29,298,932) common shares, with no face
value, in book-entry form.

ISSUE PRICE

Eight reais and twenty-eight cents (R$8.28) per common share.

The issue price for the common shares corresponds to 90% of the
weighted average of the prices in the main market of the 30
trading sessions of Bovespa (Sao Paulo Stock Exchange) held from
May 16, 2005 to and including June 27, 2005.

DIVIDENDS

The issued shares, after homologation of the respective capital
increase by the Board of Directors, shall be entitled to full
dividends as may be declared by the Company.

TERM FOR EXERCISE OF THE PREEMPTIVE RIGHT

Beginning: June 29, 2005                        End: July 28,
2005

PREEMPTIVE RIGHT RATIO

In order to ascertain the number of shares a shareholder will be
entitled to subscribe, he/she should multiply the number of
shares owned by him/her on June 28, 2005, for the following
rates:

Type of shares owned         Rate            Type to be
Subscribed  
Common                       0.046283975     Common  
Preferred                    0.046283975     Common  

PAYMENT TERMS

Cash, upon subscription.

ELIGIBILITY FOR SUBSCRIPTION

Shareholders having acquired their shares up to June 28, 2005
will be eligible to subscribe shares. Shares acquired after June
29, 2005 will be ex-preemptive right to the assignee.

Holders of ADR's: The new shares shall not be registered under
the Securities Act of 1933 and may not be offered or sold in the
United States or to North-American persons.

Shareholders wishing to trade their preemptive rights may do so
in the period from June 29, 2005 until July 21, 2005, and those
shareholders whose shares are kept in custody with Banco ABN
Amro Real should either request to such institution the
respective certificate of assignment of rights, which shall be
issued by ABN Amro Real, or instruct a securities dealer to be
selected by him/her to directly trade the shares at the stock
exchanges.

Once the certificate of assignment of rights is issued, under
the terms provided for in the preceding item, and in case of
actual disposal of the relevant shares, the corresponding
statement on the reverse side of the certificate of assignment
of rights will be required, with the signature of the assignor
duly attested by a notary public.

NON-EXERCISED RIGHTS

There will be no non-exercised preemptive rights, since this is
the case of capitalization of credits available in current
account.

DOCUMENTS REQUIRED FOR SUBSCRIPTION AND ASSIGNMENT OF RIGHTS

The shareholders will be required to present the following
original documents or certified copies thereof:

Individual: Identity card, individual taxpayer registration card
(CPF) and proof of residence.

Legal Entity: certified copy of the most recently restated
bylaws or articles of association, CNPJ (National Registry of
Legal Entities) registration card, corporate documents granting
representation powers and certified copies of the CPF, Identity
Card and proof of residence of its directors and officers.
Investors residing abroad may be required to present other
representation documents.

In case of representation by proxy, a power of attorney drawn-up
with a notary public will be required.

ASSISTANCE LOCATIONS

At securities dealers, for shares under custody with the
Brazilian Settlement and Custody Agency - CBLC and at Banco ABN
Amro Real branches, for shares under custody with such
institution.

SHARES CREDIT

The shares shall be credited within three (3) business days
after the homologation of the capital increase, save for shares
subscribed with ABN Amro Real, which shall be credited within up
to five (5) business days after the homologation of the Capital
Increase.

CONTACT: VIVO - Investor Relations
         Phone: 55 11 5105-1172
         E-mail: ri@vivo.com.br
         URL: www.vivo.com.br /ri


UNIBANCO: Proposes Global Public Offering of UNITs, GDSs
--------------------------------------------------------
Unibanco - Uniao de Bancos Brasileiros S.A. (Unibanco) and
Unibanco Holdings S.A. (Holdings) announced Thursday that they
have agreed with Caixa Geral de Depositos S.A. (CGD) to file
registration statements in Brazil and in the United States for a
global public offering of the equity interests in Unibanco and
Holdings held by Caixa Brasil SGPS, S.A. (Caixa Brasil), a
wholly owned subsidiary of CGD.

It is anticipated that the offering will consist of Units
(Bovespa: UBBR11) and Global Depositary Shares (GDSs) (NYSE:
UBB). Each Unit represents one Unibanco preferred share and one
preferred share of Holdings. Each GDS represents 5 Units.

Following the offering, Unibanco and CGD will maintain their
current commercial relationship and cooperate in developing
Unibanco's business in Portugal and CGD's business in Brazil.

In order to facilitate the proposed global public offering,
Unibanco's and Holdings' respective Boards of Directors, in
their meetings of June 30, 2005, among other items:

i) authorized their respective Boards of Officers to take all
necessary measures in connection with the registration statement
for the public offering of Units in Brazil, before the Comissao
de Valores Mobiliarios, or CVM, and the registration statement
for the public offering of GDSs in the United States of America,
before the Securities and Exchange Commission, or SEC;

ii) authorized Holdings' Board of Officers to exchange common
shares of Unibanco held by Caixa Brasil, for preferred shares of
Unibanco held by Holdings, at an exchange rate of 1 for 1;

iii) called an extraordinary shareholders meeting of Holdings to
approve the term of 30 days, beginning July 19, 2005 and ending
August 18, 2005, in order to allow holders of Holdings' common
shares to convert their common shares into preferred shares of
Holdings, subject to an eventual allotment to maintain the legal
ratio between common and preferred shares;

iv) approved submitting a request to the CVM that the holders of
Unibanco or Holdings preferred shares at August 19, 2005 be
permitted to participate in a conversion program established by
Holdings, in order to allow the conversion of preferred shares
into Units; and

v) suspended, from June 30, 2005 to August 29, 2005, the ability
of holders of Units to cancel Units and receive the underlying
preferred shares, in accordance with the respective By Laws of
Unibanco and Holdings.

The global public offering and the conversion are subject to the
filing and effectiveness of all necessary documentation with the
applicable regulatory authorities.

CONTACT: Unibanco - Uniao de Bancos Brasileiros S.A.
         Investor Relations Area
         Phone: (55 11) 3097-1980
         Fax: (55 11) 3813-6182
         E-mail: investor.relations@unibanco.com
         URL: www.ir.unibanco.com


UNIBANCO: Fitch Affirms Various Ratings
---------------------------------------
Fitch Ratings, the international rating agency, affirmed
Thursday Unibanco - Uniao de Bancos Brasileiros S.A.'s ratings
("Unibanco") as follows:

- Long-term foreign currency rating: 'BB-'(BB minus) with a
Stable Outlook
- Long-term local currency rating 'BB' with a Stable Outlook
- Short-term foreign and local currency rating: 'B'
- Individual rating: 'C'
- Support rating: '4'
- National Long-term rating: 'AA-(AA minus)(bra)' with a Stable
Outlook.
- National Short-term rating: 'F1+(bra)'

The ratings reflect Unibanco's improving franchise, strong
position in most product areas and sound management team. The
bank's foreign currency ratings are at Brazil's country ceiling;
while the local currency ratings are higher than Brazil's
sovereign rating. The latter reflects Unibanco's consistent
performance and balance sheet strength and management capacity
to manage turbulent economic cycles.

Growth of retail and middle market (SME) lending has led to a
better balance between retail and corporate exposure.
Profitability, which has lagged local peers', improved notably
in H204, and this improvement should prove sustainable, thanks
to the consolidation of the bank's established consumer finance
franchise. Unibanco's challenge lies in consolidating the
profound cultural and strategic changes that were set in motion
in early 2004 with an enthusiastic yet less tested management
team. Unibanco also faces the challenge of executing a new
business approach on the heels of significant changes to its
organisational structure and senior management in a highly
competitive and turbulent market remains. Fitch will continue to
monitor this closely.

CONTACTS: Rafael Guedes, Sao Paulo
          Tel: +5511 4504 2600

          Maria Rita Goncalves, Rio de Janeiro
          Tel: +5521 4503 2600l

          Peter Shaw, New York
          Tel: +212 908 0553

MEDIA RELATIONS: Jaqueline Ramos de Carvalho, Rio de Janeiro
                 Tel: +55-21-4503-2623

                 Jon Laycock, London
                 Tel: +44 20 7417 4327

Note:
Fitch support and individual ratings for banks: Fitch's
Individual ratings assess how a bank would be viewed if it were
entirely independent and could not rely on external support. Its
support ratings for banks deal with the question of whether a
bank would receive support from its owners or from the state if
it were to get into difficulty. These ratings are not debt
ratings but rather, respectively, an assessment of the intrinsic
strength of a bank and of any level of outside support that may,
or may not, be available to it.

Fitch's national ratings provide a relative measure of
creditworthiness for rated entities in countries where the
sovereign's foreign and local currency ratings are below 'AAA'.
National ratings are not internationally comparable since the
best relative risk within a country is rated 'AAA' and other
credits are rated only relative to this risk. They are signified
by the addition of an identifier, for the country concerned,
such as 'AAA (bra)' for national ratings in Brazil.



===============
C O L O M B I A
===============

FINANCIERA ENERGETICA: S&P Provides Ratings Analysis
----------------------------------------------------
Foreign currency BB/Stable/--

Major Rating Factors

Strengths:
    * Strong sovereign support, with a high level of direct
government guarantees.

Weaknesses:
    * The bank's weak financial condition relative to other
Colombian public sector financial institutions.
    * A high level of nonperforming loans.

Rationale

The rating on Financiera Energetica Nacional (FEN) balances the
support of the government of the Republic of Colombia and FEN's
weak financial condition (relative to that of other Colombian
public-sector financial institutions). About 60% of FEN's assets
and 3% of its liabilities are guaranteed directly by Colombia.
Most other public sector entities (such as Bancoldex) do not
benefit from such extensive direct sovereign guarantees. In
FEN's case, the guarantee underscores the importance of the
electricity sector to Colombian public policy. Nevertheless,
this support is expected to decline over the medium term as the
energy sector increasingly shifts to private hands and plans
proceed to close FEN, transferring both its assets and
liabilities to the central government.

Following the suspension of the proposed merger of FEN,
Instituto de Fomento Industrial, Fondo Financiero de Proyectos
de Desarrollo, and Financiera de Desarrollo Territorial in
September 1999 due to the constitutional court's ruling against
several parts of the proposed merger, the bank's mandate came
under review. This prompted FEN's management and the Colombian
authorities (with the help of outside consultants) to reassess
the bank's organization and structure. In May 2000, the board of
directors decided to maintain FEN's operations for two more
years and then transfer the remaining assets and liabilities to
the central government in exchange for its assets. However, in
February 2002 and in both of the subsequent two years, FEN's
board of directors extended the review process for at least one
year, citing the need to complete pending capital injections
that required FEN's active participation in its capacity as debt
holder. The date was again extended in August 2004 for at least
another year.

Outlook

Standard & Poor's expects the winding down of FEN to be
accomplished without a disruption of the bank's financial
commitments to its own creditors. FEN's nonperforming loans
(NPLs) totaled close to 20% of total loans at Oct. 31, 2004; at
that date they were fully covered by loan-loss provisions, and
equity equaled 35% of total assets. FEN's projections of sources
and uses of cash indicate an excess of cash through 2005.
Standard & Poor's expects the Colombian government to maintain
its current level of debt funding or to take other measures to
solidify FEN's financial position as long as the bank has
commercial debt outstanding.

Standard & Poor's stable outlook on FEN's long-term foreign
currency rating reflects its stable outlook on Colombia's long-
term foreign currency sovereign credit rating. As long as the
government maintains its level of debt and equity funding in FEN
and honors its existing guarantees on the bank's assets, its
ratings and outlook should track those of the government.

Profile

One of Colombia's largest financial institutions, FEN's assets
totaled Colombian peso (CoP) 2 billion; loans, CoP1.3 billion;
equity, COP745 million; and liabilities, CoP1.25 billion at Dec.
31, 2004. FEN is owned directly by the government and public-
electricity-sector enterprises. Until 2000, it engaged in
project lending to Colombia's electricity sector and to other
energy subsectors including gas, oil, and carbon. The bank
functions under the authority of the Ministry of Mines and
Energy, and the Banking Superintendency supervises its financial
position.

The composition of FEN's board of directors is defined by law.
The chairman of the board is the minister or vice-minister of
energy. Other board members include the minister or vice-
minister of finance or the director general of public credit,
the chief or deputy-chief of the National Planning Department,
the president of Ecopetrol, and an appointee of the president of
the republic who has wide experience as a financial entity
executive.

Colombia's 1994 Electricity Law introduced the regulatory
framework for restructuring the energy sector. The law aims to
gradually eliminate vertical integration among sector
participants by mandating segregation of transmission and
distribution activities. It also mandates that tariffs be
rationalized to cover a higher portion of costs, and that poorer
residential users be subsidized by industrial and upper-income
users. A substantial portion of electricity-generating companies
has been privatized. Furthermore, private-sector participation
in distribution activities has been increasing, while concession
contracts in transmission operations are being contemplated.

The central government's support of FEN is strong, and compares
favorably with that of other state-owned financial institutions.
The importance of the power sector to Colombian public policy is
underscored by the government's guarantees of the liabilities of
national electricity companies and of a significant portion of
FEN's assets and liabilities.

Given the extensive guarantees afforded FEN, Colombia will, as
required, keep its support to servicing the bank's market debt
on par with its own debt-servicing capacity.

Ownership and Legal Status

FEN is 100% owned by Colombia and is further supported by
extensive government guarantees. Colombian law prohibits the
government from guaranteeing the liabilities of private sector
companies. The plan to wind down FEN's operations and transfer
the bank's remaining assets and liabilities to the government in
exchange for its assets, with the purpose of placing the
resulting balance under trust administration, remains in place
and is expected to take effect by May 2006 (originally set to
cease operations on May 22, 2002).

Strategy

The board of directors issued instructions at its August 2004
meeting to keep FEN in operation for at least another year and
then transfer the remaining assets and liabilities to the nation
in exchange for its assets, with the purpose of placing the
resulting balance under trust administration.

Eleven action plans were put in place in May 2000:

    * Initiate negotiations of an agreement to refinance the
debt payable by the nation, under conditions that match actual
payment possibilities.
    * Disburse outstanding approved funds for Hidromiel (a
hydroelectric generation company) and for local currency working
capital to viable companies that can be privatized, with the
nation's guarantee or backing. Disburse outstanding funds to
Empresa Antioquina de Energia (an electric generation company)
only if guaranteed by Empresas Publicas de Medellin (a public
sector electric company).
    * Restrict disbursements only to the loans previously
approved by the board of directors, provided that the projects
and/or companies are viable, and disapprove any more loans to
private sector companies.
    * Authorize loan restructurings only when companies are
viable.
    * Gather deposits from public savings, exclusively for
covering shortages up to the end of 2001.
    * Manage funds provided by Colombia and other entities to
support the execution of national-interest projects.
    * Request that the government give priority to foreign-
currency payments made by Colombia to comply with the own-
position requirement, or request permission to exceed the 20%
figure of the entity's technical equity.
    * Downsize the organization's structure and operation to an
indispensable minimum level and maintain FEN at a minimum size
until privatizations are complete, at the latest by the end of
2001.
    * Begin the asset sale process, retire and liquidate current
personnel, and eliminate permanent staff hiring.
    * Adopt the statutory amendments necessary to facilitate the
transition process in FEN's balance sheet.
    * Inform creditors and the Office of the Superintendent of
Banking about the decisions made by the board of directors and
the start-up process it authorized to begin winding down
operations.

Although FEN complied with most of the eleven points, the board
of directors decided to extend the process for one year beyond
the originally envisioned May 22, 2002, completion date.
Specifically, the pending capitalizations and involvement of
private capital in energy companies required FEN's active
participation to be carried out. The date was again extended for
at least another year in August 2004.

In the near term, therefore, FEN will focus on expediting the
privatization of remaining energy assets. Despite increased
private sector participation in the energy sector, significant
assets remain in public hands. As of Dec. 31, 2004, nearly 50%
of electricity generation and electricity distribution were
still in private hands while less than 5% of electricity
transmission was in private hands.

The bank holds loans on companies in the oil, gas, and petroleum
sectors, an activity for which it has had authorization since
1994. The percentage of loans to these sectors has fallen to
less than 1% of the bank's total loan portfolio at year-end 2004
from 10% at year-end 1999.

The bank's loan portfolio, which stood at CoP1.3 billion at
year-end 2004, has diminished slowly in real terms over the past
five years. FEN has ceased loan disbursements since its mandate
changed; consequently, real loan growth fell by nearly 26% from
year-end 2003 to year-end 2004. Loans should continue to shrink
until the entity ceases to operate.

Asset Quality

The bank's asset quality benefits from explicit government
guarantees on a majority of its loans and a small borrower base
(FEN holds loans on less than 100 firms), which allows it to
monitor the companies in its loan portfolio closely. In
compliance with Colombian Bank Superintendency regulations, FEN
classifies its loan portfolio according to five risk categories.
At the end of 2004, more than 71% of the portfolio was
classified in the highest quality categories (tiers A and B).

Overall, however, FEN's loan portfolio risk is mitigated by
substantial credit support from Colombia. Over 60% of FEN's
loans were guaranteed by Colombia as of December 2004, and no
other Colombian institution enjoys the same level of sovereign
support.

On average, FEN's asset quality now compares less favorably with
other Colombian financial institutions. NPLs stood at close to
28% of total loans at year-end 2004 versus near 4% for the
overall system. Close to 81% of these nonperforming loans were
the result of nonreimbursement by the government of FEN loans to
Empresa de Energia de Boyaca (EBSA) (in compliance with a
government guarantee for the Termopaipa IV project). Provisions
also increased from less than 1% of total loans in 1998 to close
to 31% of total loans in 2004.

Profitability

FEN was consistently profitable until 2000, with return on
equity (ROE) averaging more than 15% from 1995 to 2000. ROE fell
substantially in 2000 through 2002 due to declining asset
quality, with substantial provisions against its loan portfolio
and the suspension of its lending activity as of May 2000.

Similar to other Colombian financial institutions, FEN's
profitability suffered from the recession of 1999 and from
lower-than-expected growth through 2002. ROE increased to 2.3%
in 2004 from below 0.3% in each year from 2000-2003. The
declining stock of performing assets, stemming from loan
prepayments, a lending slowdown, and higher write-offs, is
largely to blame for the profitability decline. Given the major
changes to FEN's mandate, Standard & Poor's does not expect the
bank's loan portfolio or profitability ratios to rebound to
historical levels, although the bank has benefited from a steady
improvement in efficiency and significant cuts in administrative
costs. In June 2003, the National Congress passed a law that
specifically addressed FEN's problems with the nation's
guarantee of the Termopaipa IV project, which EBSA has been
unable to meet. This will require an operation between the
nation, EBSA and FEN in which FEN can capitalize EBSA's debt,
receiving EBSA stock that is to be given to the nation as
partial payment of the FEN's debt with the nation. This would be
used to make future payments on the guarantee for 2004-2005.

Asset-Liability Management

FEN's stock of foreign currency assets and liabilities has
contracted as the bank has stopped lending. Foreign currency
loans dropped by over 26% in 2004 from 2003, a decline partially
driven by the prepayment of loans (the majority of which were
denominated in dollars), which stood at about US$431 million as
of October 2004.

The bank has allowed its stock of foreign currency liabilities
to amortize slowly over the past few years. The bank still has
foreign currency obligations, which totaled US$588 million at
end-October 2004. Of this amount, euro notes totaled 51% and
multilateral loans 14%, with the remaining syndicated and bank
loans and foreign-currency loans issued by Colombia. While FEN
generally matches funds on its peso and foreign currency books,
it is required by law to run a small net foreign currency asset
position.

Capital

The bank's capital ratios have slowly improved over the past
several years, with regulatory equity to risk-weighted assets
rising to 29.7% at year-end 2004 from 25.8% at year-end 2003.
These ratios are well above the 10% risk-based capital required
by Colombian regulators.

Primary Credit Analyst: Richard Francis, New York (1) 212-438-
7348; richard_francis@standardandpoors.com


PAZ DEL RIO: Source Confirms Shareholders Mulling Stake Sale
------------------------------------------------------------
A source from Acerias Paz del Rio confirmed reports that some
shareholders are considering the possible sale of their equity
interest in the iron and steel company.

"These are transactions or deals shareholders can perform freely
but I cannot confirm if they are true or not because they are
entitled to do this kind of operation," the source told Business
News Americas.

Paz del Rio employees and other company shareholders could also
be preparing one single negotiated deal, allowing a potential
investor to buy their shares and take over the company, the
source said.

Paz del Rio employees would execute such a transaction alongside
the state's IFI industrial development agency and the government
of Boyaca department through the department's Infiboy financial
institute, the source added.

Paz del Rio workers control 43% of the Company, while Grupo
Antioqueno has 26.4%, Infiboy 21.2% and IFI 9.3%.

Recent reports have suggested that Paz del Rio has been making
contact in the last few months with various companies from the
sector for an eventual acquisition or strategic association.

CONTACT: Acerias Paz Del Rio S.A.
         CARRERA 8A, N 13-31, PISOS 7-11
         4260 - Bogota
         Colombia
         Phone: +57 1 3411570
                +57 1 2823480



===========
M E X I C O
===========

AOL LATIN AMERICA: Taps Shearman & Sterling as Lead Counsel
-----------------------------------------------------------
America Online Latin America, Inc., and its debtor-affiliates
ask the U.S. Bankruptcy Court for the District of Delaware for
permission to retain and employ Shearman & Sterling LLP as their
lead bankruptcy counsel.

The Debtors have employed Shearman & Sterling since April 2004
for assistance in general corporate, tax and restructuring
advice.

Shearman & Sterling is expected to:

   1) provide legal advice to the Debtors with respect to their
      powers and duties as debtors-in-possession in the
      continued operation of their businesses and their
      management and supervision of the day-to-day operations of
      the Non-Debtor Foreign Subsidiaries;

   2) pursue confirmation of a proposed plan of reorganization
      or liquidation and approval of its accompanying disclosure
      statement;

   3) prepare on behalf of the Debtors all necessary
      applications, motions, answers, orders, reports and other
      legal papers required by the Court;

   4) appear in Bankruptcy Court and protect the interests of
      the Debtors before that Court; and

   5) perform all other legal services for that Debtors that are
      necessary and required in their chapter 11 cases.

By separate application filed contemporaneously with the Court,
the Debtors are seeking authority to employ Young Conaway
Stargatt & Taylor, LLP, as their lead bankruptcy counsel.  
Attorneys from Young Conaway and Shearman & Sterling have
conferred with each other regarding the division of
responsibilities and both Firms will make an effort to avoid
duplication of tasks.

Douglas P. Bartner, Esq., a Member at Shearman & Sterling,
discloses that the Firm received a $113,384.50 retainer.

Mr. Bartner reports Shearman & Sterling's professionals bill:

      Designation              Hourly Rate
      ------------             -----------    
      Partners                 $575 - $750
      Counsel & Associates     $235 - $600
      Legal Assistants &        $95 - $195
      Specialists              

Shearman & Sterling assures the Court that it does not represent
any interest materially adverse to the Debtors or their estates.

Headquartered in Fort Lauderdale, Florida, America Online Latin
America, Inc., -- http://www.aola.com/-- offers AOL-branded  
Internet service in Argentina, Brazil, Mexico, and Puerto Rico,
as well as localized content and online shopping over its
proprietary network.  Principal shareholders in AOLA are
Cisneros Group, one of Latin America's largest media firms,
Brazil's Banco Itau, and Time Warner, through America
Online. The Company and its debtor-affiliates filed for chapter
11 protection on June 24, 2005 (Bankr. D. Del. Case No. 05-
11778). Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at
Young Conaway Stargatt & Taylor, LLP represents the Debtors in
their restructuring efforts.  When the Debtors filed for
protection from their creditors, they listed total assets of
$28,500,000 and total debts of $181,774,000. (Troubled Company
Reporter, July 1, 2005, Issue No. 154)


GRUPO DESC: Sells Valve Lifter Business to Eaton Corporation
------------------------------------------------------------
DESC, S.A. de C.V. (BMV: DESC) announced Thursday the sale of
Morestana, S.A. of C.V. ("Morestana"), the valve lifter
business, to Eaton Corporation.

The total value of the transaction is approximately US$8
million, the proceeds of which will be used primarily to finance
the investment requirements in those businesses with the
greatest potential to create value and growth. Notably, annual
sales of Morestana during 2004 were US$13 million.

Eaton Corporation (NYSE: ETN) is a diversified industrial
manufacturer with sales of US$9.8 billion in 2004.

DESC, S.A. de C.V. is one of the largest industrial groups in
Mexico, with 2004 sales of approximately US$2 billon and nearly
14,000 employees, which through its subsidiaries is a leader in
the Automobile Parts, Chemical, Food and Property businesses.

CONTACTS:  In Mexico
           Marisol Vazquez-Mellado
           Jorge Padilla
           Tel: (5255) 5261-8044
           E-mail: ir@desc.com.mx

           In USA
           Maria Barona
           Melanie Carpenter
           Tel: 212-406-3690
           E-mail: desc@i-advize.com


HYLSA: Summary of S&P Analysis on Ratings
-----------------------------------------
Rationale

The rating on Mexican steel producer Hylsa S.A. de C.V. (Hylsa)
reflects the company's somewhat aggressive financial profile,
the challenges posed by industry cyclicality, very competitive
steel markets, the high percentage of spot sales to total sales,
and relative exposure to the construction industry. The rating
also reflects Hylsa's backward integration, an improved balance
sheet due to debt reduction during 2004, and its position as one
of the largest steel makers in Mexico.

On May 18, 2005, Alfa, Hylsamex's majority shareholder, which in
turn wholly owns Hylsa, accepted Techint Group's offer to buy
its Hylsamex shares. At this time, both companies are waiting
for the authorities' approvals. The change in control will not
have any effect on the rating because Standard & Poor's Ratings
Services' rating on Hylsa is on a stand-alone basis.

Even though Hylsa made its first dividend payment in the past
six years in 2004, Hylsa's dividend policy in the upcoming years
could be defined as aggressive. As a result of the company's
change in control, Hylsamex is planning to make an extraordinary
$143 million dividend payment one day before Techint starts
Hylsamex's public bid. Hylsa will be responsible for around 87%
of this dividend. Even though Hylsa is in a better financial
position, we consider this extraordinary dividend aggressive.

As of March 31, 2005, Hylsa's performance has been solid. The
EBITDA margin for the 12 months ended March 31, 2005, was 35.8%,
which compares favorably with the 34.6% EBITDA margin by 2004-
year end. We expect Hylsa's EBITDA margin in 2005 to be between
28% and 30%. Moreover, the interest coverage ratio and total
debt-to-EBITDA ratios had performed better than the past year
(11.1x and 0.7x, respectively, compared with 9.8x and 0.7x,
respectively). Both ratios benefited from last year's debt
reduction. Nevertheless, a high percentage of Hylsa's sales are
under spot price that increases exposure to the volatile steel
spot market. Thus, the company's operation performance is linked
to spot market conditions.

Although Hylsa's numbers remained strong during first-quarter
2005, they have decreased from their peak in third-quarter 2004.
We believe that the Mexican steel industry will continue to take
advantage of strong world demand, especially from China, which
also has been the main reason for the fast increase in raw
material costs. Current market conditions favor Hylsa's business
model of backward integration into iron ore and its capacity to
switch between steel scrap and direct-reduced iron in the steel-
making process.

Hylsa is the second-largest producer of flat steel in Mexico (3
million metric tons), vertically integrated, and has low-cost
production. In 2004, the company revenues were $1.9 billion, and
it sold 2.9 million tons.

Liquidity

Hylsa's liquidity is adequate. The company had $152 million in
cash as of March 31, 2005, and a three-year committed credit
line of $60 million. Additionally, we anticipate Hylsa will
generate free operating cash flow of more than $200 million in
2005. Maturities for the rest of 2005 and 2006 are $6 million
and $48 million, respectively. We do not expect Hylsa to have
problems covering obligations. Hylsa is comfortably in
compliance with financial covenants established under its loan
agreements.

Outlook

The outlook is stable. The ratings could be raised over time if
Hylsa improves its business profile, increases its value-added
mix, and maintains adequate debt levels. The ratings could be
lowered if improved financial performance is not sustainable,
leverage increases, or dividend payments are higher than
expected.

Primary Credit Analyst: Juan P Becerra, Mexico City (52) 55-
5081-4416; juan_becerra@standardandpoors.com

Secondary Credit Analyst: Jose Coballasi, Mexico City (52)55-
5081-4414; jose_coballasi@standardandpoors.com


SATMEX: Seeks Bankruptcy Protection Under Mexican Jurisdiction
--------------------------------------------------------------
Satellite operator Satelites Mexicanos (Satmex) has decided to
file for protection under Mexican bankruptcy laws, opting for a
local procedure known as a "concurso mercantil," rather than the
US Chapter 11 system.

In a press release late Wednesday, the Company said its decision
is a necessary step in the negotiations to restructure its debt
obligations and aimed at "creating a path" for the Company to
launch its Satmex 6 satellite in the first quarter of 2006.

Satmex Chief Executive Sergio Autrey said the Company is
"hopeful to be able to implement a consensual restructuring that
will not interfere with our service to customers and our
commitment to become the leading satellite operator in the
Americas."

CONTACT: SATELITES MEXICANOS, S.A. DE C.V.
         Blvd. M. Avila Camacho 40, piso 24
         Colonia Lomas de Chapultepec
         11000 Mexico, D.F., Mexico
         PHONE: +52-55-5201-0898


SATMEX: Creditors Frustrated Over Mexican Bankruptcy
----------------------------------------------------
Satelites Mexicano's (Satmex) decision to file for bankruptcy in
Mexico will not stop its U.S. creditors form pursuing a U.S.
Chapter 11 bankruptcy process, according to their lawyers.

Dismayed by Satmex's decision, the creditors said that they
intend to pursue their joint plan to restructure the Company's
U.S.-issued debt obligations through a U.S. Chapter 11
proceeding.  

The group of secured and unsecured noteholders, holding in
excess of $379 million of outstanding notes of Satmex, filed an
involuntary Chapter 11 petition against the Company in the U.S.
Bankruptcy Court for the Southern District of New York on May
25, 2005. The creditors agreed on June 13 to extend a deadline
for Satmex to respond to their petition to July 7 from June 15.

"The creditors are committed to ensuring the viability of Satmex
and believe that the best chance to achieve a timely and
successful restructuring is under a court-supervised Chapter 11
reorganization in the U.S.," said Mitchell A. Harwood, Managing
Director of Evercore Partners, financial advisor to the ad hoc
committee of holders of the Senior Secured Floating Rate Notes.

The creditors believe that the United States is the proper venue
for a court supervised restructuring because the only debt to be
compromised as part of the restructuring is the bond debt issued
by Satmex in the United States, almost all of which is held by
U.S.-based creditors. Moreover, Satmex consented to jurisdiction
in New York in connection with the bond debt.  

The ad hoc committees of holders of:

   -- the Senior Secured Floating Rate Notes due 2004,
      represented by Wilmer Cutler Pickering Hale and Dorr LLP;
      and

   -- the 10-1/8% Senior Notes due 2004, represented by Akin
      Gump Strauss Hauer & Feld LLP,

have proposed a restructuring plan that would put Satmex back on
solid financial footing within 90 days while providing up to $55
million of financing to launch the Satmex 6 satellite currently
in storage in French Guiana.

"The creditors believe the restructuring plan submitted in
connection with the involuntary Chapter 11 filing represents the
quickest way to inject new capital into Satmex, reduce the
Company's debt levels, and preserve value for all stakeholders,"
said Skip Victor, Senior Managing Director of Chanin Capital
Partners, financial advisor to the ad hoc committee of holders
of the 10-1/8% Senior Notes.  

"While the creditors are hopeful that a consensual restructuring
can be reached and remain willing to work with the Company and
its shareholders to achieve that goal, they are concerned that
their requests to meet with the Mexican Government to discuss
the terms of a consensual restructuring have to date been
rejected," Mr. Victor said.

The creditors believe that Satmex may have filed a voluntary
concurso mercantil not because it is in the best interest of the
Company and its customers but rather due to pressure from the
Mexican Government. The creditors' belief is due to Mexican
press reports suggesting that officials of Mexico's Ministry of
Transportation and Communications have pressured the Company
into a concurso mercantil filing to allow the Mexican Government
to extract value from Satmex for a debt that is owed to the
Mexican Government not by Satmex but rather by Satmex's parent
company, Servicios Corporativos.

These press reports suggest that SCT officials want the Satmex
restructuring to proceed in Mexico where they believe the
menoscabo and the Mexican Government's position as minority
shareholder will be treated more favorably than in a U.S. court.
The creditors stressed that their U.S. Chapter 11 restructuring
plan would not compromise the menoscabo debt owed by Servicios
Corporativos. On the contrary, the Creditors fully support the
payment in full of the Mexican Government's menoscabo debt ahead
of any distributions to Satmex shareholders.

Given that the menoscabo debt would not be compromised under the
proposed Chapter 11 restructuring plan, the creditors are
surprised that the Mexican Government, a shareholder in the
Company, would not consider and respond to the creditors'
proposal, which has the support and approval of more than two-
thirds of Satmex's creditors and which would quickly provide the
Company with badly-needed new financing.

Headquartered in Mexico, Satelites Mexicanos, S.A. de C.V.,
derives over 50% of its revenues from United States business,
and all of the Company's over US$500 million in debt was issued
in the United States and is governed by New York law. The
Company's largest shareholder, Loral Space & Communications
Ltd., is a United States public company also undergoing a
Chapter 11 reorganization in the U.S. Bankruptcy Court for the
Southern District of New York. The Company is forced into
chapter 11 by three noteholders on May 25, 2005 (Bankr. S.D.N.Y.
Case No. 05-13862). The noteholders are represented by Wilmer
Cutler Pickering Hale and Dorr LLP and Akin Gump Strauss Hauer &
Feld LLP.

Under U.S. bankruptcy law, Satmex has 20 days to respond to the
involuntary petition, during which time the Company is entitled
to operate its business in the ordinary course. In the event
that the Company or another party contests the involuntary
petition, it will be up to the Bankruptcy Court to determine
whether the Chapter 11 reorganization will proceed.



=============
U R U G U A Y
=============

BANCO NACION (URUGUAY): Moody's Upgrades Deposit Ratings
--------------------------------------------------------
Moody's Investors Service upgraded Thursday the long-term
foreign and local currency deposit ratings of Banco de la Nacion
Argentina (Uruguay) to Caa1 from Caa2.

The rating action followed the upgrade of its head office Banco
de la Nacion Argentina's foreign currency deposit ratings to
Caa1.

The outlook on the ratings is stable.

As a result of this rating action, Moody's also raised the
National Scale ratings for foreign and local currency deposits
of Banco de la Nacion Argentina (Uruguay) to Ba2.uy from B1.uy.



=================
V E N E Z U E L A
=================

PDVSA: To Submit 2003 Financial Results to U.S. SEC
---------------------------------------------------
State oil firm Petroleos de Venezuela (PDVSA) will finally
present its financial statements for 2003 to the US Securities
Exchange Commission (SEC) by the end of July, according to PDVSA
CFO Eudomario Carruyo. Independent auditors KPMG-Alcaraz,
Velasquez y Asociados, have finished their assessments and now
all that remains is that PDVSA's shareholders approve the
financial report before going to the SEC, according to Mr.
Carruyo.

Meanwhile, Mr. Carruyo expects the Company to generate a net
profit of US$6.5 billion this year on sales of about US$100
billion thanks to high international oil prices. In 2004, PDVSA
generated revenues of US$64.5 billion and net profits of US$6.19
billion.

Net profit is calculated after subtracting taxes, royalties,
dividends and the cost of President Hugo Chavez's billion-dollar
social programs and contributions to Fondespa, a fund to invest
in infrastructure and other urgent public works.

"The total of those contributions will be US$20 billion this
year up from US$16.5 billion in 2004 and US$10 billion in 2003,
Mr. Carruyo forecast.


PDVSA: Harvest Natural Resources Receives Partial Payment
---------------------------------------------------------
Harvest Natural Resources, Inc. (NYSE: HNR - News) announced
Thursday that Harvest Vinccler, C.A. (HVCA), its 80 percent
owned Venezuelan subsidiary, received $27 million in U.S.
dollars and 58 billion bolivars (the local Venezuelan currency
equivalent to $27 million U.S. dollars at the official exchange
rate) as partial payment for its 2005 first quarter deliveries
of oil and gas to Petroleos de Venezuela, S.A. (PDVSA). The
amount of the payment due May 31, 2005 was $64 million.

Harvest President and Chief Executive Officer, Dr. Peter J.
Hill, said, "While we acknowledge the delayed partial payment,
the payment shortfall and receipt of a portion of the fee in
bolivars are not consistent with the terms of our operating
service agreement. We are hopeful of resolving the payment
issues and negotiating other outstanding items to the mutual
benefit of Harvest and PDVSA as we seek to transition HVCA to a
mixed company."

Harvest Natural Resources, Inc. headquartered in Houston, Texas,
is an independent oil and gas development and production company
with principal operations in Venezuela and an office in Russia.
For more information visit the Company's website at
http://www.harvestnr.com.



                            ***********


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