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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (52879)	7/30/2009 11:32:55 AM
From: elmatador	Read Replies (1) \| Respond to of 217593

Brazil's Move Towards Longer-Term Debt Met With Open Arms Let'a syphon this money... SAO PAULO (Dow Jones)--Brazil sold $500 million in a reopening of its 2037 bonds Wednesday, seeking to beef up the longer end of its debt curve in a deal met with hefty demand despite a bout of risk aversion in global markets. Demand for the bonds surpassed $6.5 billion, and the broad investor base included many U.S-based high-grade bond investors, people familiar with the deal said. The bonds, which carry a coupon of 7.125%, were sold at 108.63 to yield 6.45%. The yield on the existing 2037s hovered around 6.3% to 6.4% Wednesday, and the bonds traded around 109 3/4 most of the day, according to Reuters. But the enticing price discount and yield told only one part of the bond's success story on a day investors were in a darker mood elsewhere. Crude-oil prices tumbled, U.S. and other key stock markets fell out of concerns that poor economic conditions still crimp raw-materials demand, and at home Brazil posted a lower 12-month primary budget surplus in June compared to May. "It's a very strong credit with very strong fundamentals," Gunter Heiland, an emerging-market bond-fund manager with JPMorgan Asset Management in New York, said of Brazil. Managers have been largely optimistic on Brazil, as the South American country is expected to emerge from recession shortly on the strength of its domestic demand. Wednesday marked the third time this year that Brazil has accessed the overseas debt market, but the two earlier operations involved shorter-term maturities. In January, Brazil issued $1.025 billion in global bonds due in 2019. The bonds were sold at a yield of 6.127%. In May, it reopened the operation, raising another $750 million with a yield of 5.8%. The country is using the comfortable position of its overseas accounts to improve its debt profile. As of July 27, the most recent data available, Brazil's foreign-exchange reserves were at a historic high of $210.4 billion. "It is important to note that all treasury issues are designed to improve the quality of our debt. We don't need to raise money," Deputy Treasury Secretary Paulo Valle told Dow Jones Newswires in an interview last week. At that time, Valle said it was likely Brazil would tap the market again in the second half of the year, focusing especially on long-term bond issues due to improved market conditions. There were $2.5 billion in outstanding 2037 bonds. The original operation was in January 2006, when the nation raised $1 billion with a yield of 7.57%. "The current operation is good for the government and also for Brazilian companies, which could follow the treasury's lead," said Alberto Kiraly, vice president of the Brazilian Investment Banks Association, or Anbid. As for Wednesday's issue, the treasury previously said it would limit the offer to $500 million, regardless of demand, a person close to the operation said. In the first half of this year, Brazilian companies raised a total of $4.15 billion from overseas bonds issues, up from $3.14 billion in the first half of 2006, according to Anbid. Kiraly highlighted the fact that foreign investor appetite is for issuers noted for "high quality," such as Brazil. Brazil's sovereign debt is rated at an investment-grade status of BBB- by Standard & Poor's and Fitch Ratings, while Moody's Investors Service is currently reviewing Brazil's speculative rating of Ba1. -By Rogerio Jelmayer, Dow Jones Newswires; 5511-2847-4521; rogerio.jelmayer@dowjones.com