Brasília – Brazil obtained US$ 1.25 billion abroad by selling bonds maturing in 2041 at the second lowest interest rate in the history of the country. According to figures disclosed by the National Treasury, the rate of return (interest charged by international investors to purchase the Brazilian bonds) was 5.8% per year.
In May 2008, Brazil had recorded the lowest interest rate ever, at 5.299% per year. The bonds, however, matured in 10 years. With regard to bonds maturing in 30 years, such as those issued yesterday (30th), the rate was the lowest ever.
The last time that the government issued 30-year bonds, in January 2007, the Treasury obtained an interest rate of 6.635% a year. Lower rates mean that international investors are less wary that the country will not honour its commitments.
Bonds with longer maturation periods also indicate that foreign investors are more confident in the economic stability of the country issuing the bonds. The Treasury has announced that it will issue another US$ 62.5 million in bonds on the Asian market.
The issuance of foreign bonds was the first since Brazil received investment grade status from risk rating agency Moody’s. On Tuesday (29th), the Brazilian Treasury secretary, Arno Augustin, had announced that the government intended to obtain funds abroad before the end of the year.
According to the secretary, the main goal of the issuance was to help set a reference for Brazilian companies that wish to shop for funds in other countries, as opposed to extending the deadline of the public debt or increasing foreign exchange reserves.
The dollars obtained will only be incorporated to the foreign exchange reserves on October 7th. Including this issuance, Brazil has already obtained US$ 3.55 billion abroad in 2009. This was the fourth time this year that Brazil issued bonds abroad.
In January, the Treasury obtained US$ 1.025 billion with bonds maturing in 2019. In May, another US$ 750 million were obtained abroad, also with bonds maturing in 2019. In late July, Brazil issued another US$ 525 million in bonds, maturing in 2037.
*Translated by Gabriel Pomerancblum
