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Global Credit Research - 31 Mar 2014
Sao Paulo, March 31, 2014 -- While the 2014 FIFA World Cup will have little lasting impact for most
rated sectors in Brazil, the food and beverage, lodging,
car rental, TV broadcasting and advertising sectors will see a revenue
boost during the games, Moody's Investors Services says in
a new report, "2014 FIFA World Cup Brazil: A Quick Score
for the Beverage, Travel, Construction and Broadcast Sectors."
"Some hope hosting the World Cup will help lift Brazil out of economic
slowdown, but the associated economic activity ultimately pales
before the country's $2.2 trillion economy,
the usual levels of investment spending and the annual revenues of most
companies," says Vice President -- Senior Analyst,
Barbara Mattos. "The 32-day event will provide short-lived
sales increases that are unlikely to materially affect earnings and disruptions
associated with traffic, crowding and lost work days will take a
toll on business."
Nevertheless, the World Cup is a rare sporting event that offers
an opportunity for global media exposure, Mattos says. Each
game during the last World Cup, in 2010, had an average audience
of 188.4 million people, and 1 billion people watched at
least part of the tournament. Set to the benefit from increased
exposure are large corporate sponsors including Coca-Cola Co.,
Adidas AG, Anheuser-Busch InBev SA/NV's Budweiser and
While the BRL26 billion ($11 billion) in planned spending on football
stadiums and airport, port and urban mobility upgrades is positive
for local infrastructure providers, it accounts for only 0.7%
of overall planned investment in Brazil in 2010-14 and most of
the impact has already been felt, according to the new report.
Invepar, a domestic infrastructure investment company, stands
out as the most affected by World Cup spending. Heavy construction
companies Construtora Andrade Gutierrez S.A., OAS
S.A. and Mendes Junior Trading e Engenharia S.A.
have also gained substantially.
And for host cities and states, official estimates of World Cup-related
spending range from just 0.24% to 12.75% of
expected 2014 fiscal revenues. Spending on World Cup projects is
incorporated within host cities and states infrastructure pipeline,
remains well within budgets and will not affect their long-term
» But hosting football's marquee event isn't entirely
without risk, Moody's notes. "While the World
Cup offers potential reputational benefit, Brazil's image
would be marred by a reprise of the social unrest seen last June,
during a run-up event, the Confederations Cup, as it
would be if needed infrastructure were not ready in time, with negative
implications across sectors."
Moody's research subscribers can access this report at https://www.moodys.com/research/2014-FIFA-World-Cup-Brazil-A-Quick-Score-for-the--PBC_166461.
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Barbara Mattos, CFA
Vice President - Senior Analyst
Corporate Finance Group
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Marianna Waltz, CFA
Associate Managing Director
Corporate Finance Group
Moody's: 2014 FIFA World Cup to provide temporary lift for Brazil
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
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