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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Jim McMannis who wrote (42380)	9/27/2005 12:09:26 PM
From: Wyätt Gwyön	Read Replies (1) of 110194

there is an article in the latest issue of The Economist which discusses what Brazil is doing. this is the first real-based 10yr they have issued for foreign buyers. before, if you wanted to buy real-based sovereigns, you had to open up a bank acct in Brazil, pay Brazilian taxes, etc. big pain in the butt for small investors. so until now, foreigners have only bought USD-denominated bonds, which carry a much lower YTM. i was quoted 7.4% on USD-denominated on Friday, vs. 12.95% on real-denominated (what i got today). the govt actually pays the transfer agent in USD, based on the going cross rate. this apparently saves complications and possible exchange fees that could be incurred if the real/USD exchange was done by the transfer agent. i think Brazil has one of the highest real interest rates in the world. almost 20% overnight rate while inflation is under 5%. (to get the overnight rate i think you still need to have an acct in Brazil and pay taxes there.) economist.com

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