MercoPress. South Atlantic News Agency

Brazil sells 3.2bn dollars in new global bonds to improve the best yield curve

”The market is less volatile, calmer, and the (debt) issue helps Brazil show its fundamentals” said Arno Agustin

Brazil sold about 3.2 billion dollars of new global bonds due in 2025, more than twice the original launch amount, as it paid the largest premium over U.S. Treasuries for a similar maturity since 2009 (approx 4.3%). The National Treasury is also buying back about 2 billion dollars of high-coupon notes maturing between 2017 and 2030.

The bond sale on Wednesday came as investors' appetite for riskier assets is rising on bets that the U.S. Federal Reserve will delay scaling back its monetary stimulus. The Fed's bond-buying program, which aims to hold down U.S. interest rates, has resulted in a steady source of dollars seeking higher returns in emerging markets.

While issuing a new bond with a lower coupon, the government aims to retire older bonds that do not help create “the best yield curve for Brazil,” Treasury Secretary Arno Agustin told reporters in Brasilia.

”The market is less volatile, calmer, and the (debt) issue also helps Brazil show its fundamentals,” Agustin said.

The Treasury unveiled a list of eight securities worth 12.8 billion that may be repurchased, though Agustin said the government does not intend to withdraw all of them.

Among bonds with higher coupons to repurchase are the 12.75% bond due in January 2020, the 10.125% bond due in May 2027, and 12.25% bond due in March 2030.

The Treasury launched 1.5 billion worth of the new global bonds maturing in January 2025, three times the minimum benchmark size it intended to issue.

The new bonds initially offered a yield of about 200 basis points above yields paid by comparable U.S. Treasuries, but the Treasury later reduced that premium to 180 basis points - its highest spread over 10-year U.S. Treasuries since 2009.