Birth of the A-Bond

Birth of the A-Bond


The Brazilian Treasury marked the end of an era in emerging markets in August, when it replaced 80% of its C-bonds with a new bond named the A-bond. For many years, the C-bond (or Front Loaded Interest Reduction with Capitalization Series L Bond) was the most liquid emerging-market bond and the benchmark for the asset class. But Brazil wanted to rid itself of the stigma attached to the so-called Brady bonds, issued as part of the debt restructurings orchestrated in the early 1990s by former US Treasury Secretary Nicholas Brady. In a deal last month led by JP Morgan and CSFB, Brazil eliminated the biggest Brady bond of all and saved itself some money as well. "The C-bond

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