Brazil Teases Out Bradys
A $1.33 billion debt exchange retired Brazil's expensive Brady bonds. But the deal miffed some investors who thought they would be able to cash in their benchmark C-bonds.
Brazil executed a $1.33 billion
debt exchange in July, its first in two years, achieving some
of its highest-ever participation rates from holders of its
Brady bonds and releasing $650 million in collateral. While the
Brazilians hailed the deal as a success, some investors were
unhappy with the way it was structured, and complained they had
been led to expect a more ambitious transaction, perhaps
involving the withdrawal of a big chunk of Brazil's benchmark
C-bond. But the Brazilians refused to pay the premiums
bondholders were expecting. Beny Parnes, the central bank's
international director, says bluntly, "We represent the
interests of the Republic and we will not forget that. We are
responsible for the liability management of the Republic and we
care about diminishing costs for the Republic."
Bankers focused on the deal's positive aspects. Cheikh Kane,
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