Brazil Pays Up
After a five-month absence from the markets, Brazil issued a
$750 million five-year floating-rate bond in June, just nine
days ahead of the Federal Reserve's Open Market Committee June
30 meeting, which investors widely expected would raise
short-term US interest rates. Goldman Sachs and Merrill Lynch
led the deal, priced at 575 basis points over Libor. Brazil had
little choice but to sell medium-term floating rate debt, since
investors shunned emerging market debt ahead of the Fed's June
meeting. This was only Brazil's second issue of the year. The
country issued a $1.5 billion, 30-year bond in January before
borrowing costs surged.This is the first time in a decade that
Brazil has issued a floater.
Brazil has a heavy amortization schedule this year. It had
to pay down $822 million in foreign debt in June alone. The
government has a further $5.4 billion in...
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