Foreigners reduced their holdings of Brazilian bonds in April to the lowest since 2009, figures on Wednesday showed, against the backdrop of rising financial market turmoil fueled by the coronavirus crisis and domestic political uncertainty.
Brazil's Treasury on Thursday paid the highest yield ever to launch a new 10-year benchmark fixed-rate domestic bond. The Treasury said it sold two million NTN-F bonds maturing in January 2025, worth 1.64 billion Reais (683 million dollars), at a yield as high as 13.3899%. The bond is expected to become Brazil's new 10-year benchmark paper.
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.
Brazil will inject less money next year into the country's development bank BNDES, (National economic and social development bank), its leading source of long-term corporate loans, to focus more on infrastructure financing as concerns mount over public debt.
Brazil on Wednesday sold 1.25 billion in dollar-denominated global bonds due in 2023, at the cheapest borrowing costs ever from foreign investors. High demand allowed the government to improve financing conditions by lowering the bond's yield spread over comparable US Treasury debt to 110 basis points from an initial 115 basis points.
Brazilian Finance Minister Guido Mantega said Wednesday that his country's default risk had become lower than that of the United States.
Brazil's federal public debt rose in March as the government issued more debt than it redeemed and paid higher servicing costs, the national treasury said on Monday.
Brazil's forex reserves surpassed the 300 billion US dollars mark for the first time ever this week according to the country's central bank as a result of recent heavy foreign exchange inflows and accelerated US dollar buying by the institution.
Brazil said on Wednesday it was worried by the US Federal Reserve's plan to buy billions more dollars in bonds, saying the US policy of easy money could lead countries to enact protectionist policies.