Brasília – Recent improvements in the grades of the Brazilian debt by risk rating agencies had little practical effects on Brazilian public bonds abroad, said the general coordinator of Public Debt Operations, Fernando Garrido, this Tuesday (21st). According to him, the prices of the country’s bonds have not changed after the grades were raised.
“The improved rating did not cause a reaction of the market prices of Brazilian bonds. In practice, investors had already included the higher grade in the prices,” said the coordinator while commenting on the results of the Federal Public Debt (DPF) for the month of May. He claimed that the National Treasury has not defined yet whether it will use the improved risk rating to issue bonds and raise funds abroad.
Yesterday (20th), the risk rating agency Moody’s raised the grade of the Brazilian debt, which in practice means that the country has a lower probability of defaulting on its debt. Last week, the insurances that investors pay to cover the risk of default on the part of Brazil were lower than those of the United States for the first time ever.
Aside from making it easier to raise funds abroad, the increased Brazilian debt grades may attract the interest of foreign investors. Nevertheless, Garrido claimed that uncertainty surrounding the world economy, stemming from the turmoil in Greece and the rest of Europe, makes it hard to tell whether the inflow of foreign funds will become stronger.
Last month, the share of foreigners in the Brazilian domestic debt rose from 11.29% to 11.45%. The result, however, is not a record high. The highest rate of presence of foreign investors was 11.80%, recorded last January.
*Translated by Gabriel Pomerancblum
