Brazil sells $50mn of reopened bond in Asia

SAO PAULO: Brazil sold an additional $50 million of 10-year bonds in a reopening on Friday, underscoring appetite by Asian investors for high-rated, emerging-market investments.

The sale in Asia, plus a $500 million reopening on Thursday to European and Western Hemisphere investors, brings the total outstanding face value of the bond, which matures in January 2021, to $2.16 billion.

The bond was sold to Asian investors at a price of 105.348 cents on the dollar to yield 4.188 percent, the lowest ever for a Brazilian sovereign bond, the Treasury said. The pricing conditions were the same as Thursday's sale.

The last time Brazil reopened this bond, in July 2010, the debt was sold at 102.707 cents on the dollar to yield 4.547 percent.

The average spread for emerging market debt according to JPMorgan's EMBI+ emerging market debt index is 273 basis points, or 2.73 percentage points more than comparable US Treasuries.

The narrowing spread on Brazilian debt suggests that investors view Brazilian sovereign obligations as less risky than in the past. This has prompted them to reduce the extra return they expect on Brazilian bonds compared with comparable debt issued by borrowers in the perceived safe haven of the United States.

With an ongoing euro zone sovereign debt crisis rattling global markets and worries about slowing growth in China, the world's second-largest economy, investors have dumped riskier assets around the world this year.

Brazil's benchmark Bovespa stock index, for example, is down more than 11 percent so far in 2011.

Goldman Sachs Group and Banco Santander managed the bond sale.

Demand for the securities topped $4 billion on Thursday, according to International Financing Review, a Thomson Reuters publication.

The deal followed two days after Colombia sold $2 billion in 10-year global bonds, the country's largest ever debt issue in foreign capital markets.

Brazil and Colombia both have investment-grade credit ratings from the three major ratings agencies.

Copyright Reuters, 2011