Bond Trading Shrivels After Lula Tax Increase: Brazil Credit
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Trading in Brazil’s longest-maturity bonds is drying up after President Luiz Inacio Lula da Silva tripled a tax on foreigners’ purchases of local debt.
Daily average trading of fixed-rate bonds due 2021 has tumbled 62 percent to 172 million reais ($101 million) since Lula raised the tax for a second time this month on Oct. 18 in a bid to stem a currency rally, according to the capital markets association, known as Anbima. Trading averaged 454 million reais in the first 11 business days of the month and 354 million reais in September.