Brazil is planning to sell $1 billion of 30-year dollar bonds this month in what would be the first sale denominated in the U.S. currency since October.
The government is planning to sell $1 billion of bonds maturing in 2044 or 2045, according to a person familiar with the transaction. The Treasury may sell an additional amount of the bonds at a later date under a program valued at as much as $3 billion, according to the person, who asked not to be identified because he isn’t authorized to speak publicly.
Brazil is planning its first sale of 30-year bonds since October 2011 as U.S. Federal Reserve Chair Janet Yellen said today in congressional testimony that interest rates aren’t likely to increase unless the economic recovery is stronger. Benchmark U.S. Treasury 10-year note yields fell last week to a three-month low.
“The timing is good for the government to come up with a new issue, especially a bond with a long maturity,” Carlos Gribel, vice president for emerging markets at INTL FCStone Securities, said in a telephone interview from Miami. “We have seen strong demand for Brazilian issuers in the past few weeks, and there should be good demand for a sovereign bond.”
Yields on Brazilian dollar bonds maturing in 2041 dropped five basis points, or 0.05 percentage point, to 5.04 percent at 3 p.m. in New York, the lowest level since June.
Treasury Secretary Arno Augustin told reporters yesterday that the government is considering longer-term bond issuance abroad that the market is favorable at the moment.
“Every time the market stabilizes, we dedicate ourselves to making an analysis, and this is what we’re doing at this moment,” he said.
Standard & Poor’s lowered Brazil’s credit rating on March 24 to one level above junk, saying sluggish economic growth and an expansionary fiscal policy are fueling an increase in the government’s debt.
Brazil sold 1 billion euros ($1.39 billion) of bonds due in 2021 on March 27.