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Nov 7, 2003

Brazil Rides the Rally
Emerging market bonds rallied in October after Moody's raised Russia's ratings two levels to investment grade, fueling speculation that other issuers, particularly Brazil, would also be upgraded imminently. Several governments, which normally begin tapping the market in January, brought bond sales forward to October to make the most of the rally.

Brazil, still basking in investor adulation, raised $1.5 billion with a seven-year bond that locked in its lowest-ever borrowing costs. The bond, placed by CSFB and Merrill Lynch, pays annual interest of 9.25% and was priced to yield 9.45%. This was the largest foreign bond Brazil has issued so far this year. The Central Bank, which handles foreign bond sales on behalf of the Treasury, had initially planned to sell just $1 billion in bonds but upsized the issue as demand quickly outstripped supply. Brazilian officials say they intend to sell $5.5 billion in international...

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