Brasília – The Brazilian National Treasury managed to obtain US$ 750 million from North American and European investors. The money came from an issuing of foreign debt sovereign bonds maturing in January 2019 that took place on Thursday (7th). The return rate for investors is 5.80% a year. This is the second lowest rate ever recorded for ten-year bonds.
By issuing foreign debt bonds, the government loans money from international investors and commits to returning the funds plus interest. Lower interest rates indicate a higher level of trust from investors in the country’s ability to honour the debt.
The lowest rate ever recorded for foreign bonds with ten-year maturity was 5.299% a year. Such rate was obtained by issuing US$ 525 million in foreign debt bonds, in May last year. The issuing occurred a few weeks after Brazil earned investment grade – a guarantee from risk rating agencies that the country will pay its debt.
Today’s issuing is the second one after the worsening of the international financial crisis. In January, the country issued another batch of bonds maturing in 2019. On the occasion, the Treasury obtained a higher figure (US$ 1.025 billion), but interest rates were also higher (6.127% per year).
According to the National Treasury, the demand for Brazilian bonds enabled the government to obtain lower interest rates in the market. The demand for bonds, according to the government, was higher than the supply, but technicians would not disclose the exact figure.
According to the Treasury, today’s issuing was quality-oriented, because the government already has nearly all of the dollars that it needs in order to pay for this year’s instalments of the foreign debt, estimated at approximately 16.1 billion reals (US$ 7.5 billion). According to the Brazilian Ministry of Finance, the bonds maturing in ten years were issued to benefit from the current better market conditions in order to reduce the cost and improve the outlook of the foreign debt.
The Treasury also informed that Brazil performed better than other emerging nations, as it managed to obtain funds at lower costs. In mid-April, Colombia obtained US$ 1 billion from ten-year bonds, however it paid an annual interest rate of 7.375%.
*Translated by Gabriel Blum
