The National Treasury raised US$ 2.25 billion from international investors with increased interest rates compared to the latest issues. The money came from the issue, this Wednesday (5), of US$ 2.25 billion in foreign debt bonds maturing in October 2033.
The rate obtained on the issuance of ten-year bonds added up to 6.15% per annum. At the latest release of this type of paper, in June 2021, the yield had been 3.875% per annum. Despite the higher rates, Treasury sources say rates were lower than expected at 6.5% per annum.
At the highest level for ten-year bonds since November 2006, the interest obtained on Wednesday was mainly due to the recent rise in US basic rates, which have risen since 2022. As the final rate depends on the yield on US bonds, Considered the safest investments in the world, plus a risk premium, interest rates on Brazilian bonds also rose.
Low interest rates indicate little investor distrust that Brazil will not be able to service its debt. In times of economic crisis and rising external rates such as the current one, foreigners began to charge higher interest rates to buy Brazilian securities.
Despite the rise in interest rates abroad, the Treasury reported that Brazilian bonds were well received abroad. Demand for Brazilian papers exceeded expectations, reaching US$ 8.5 billion.
According to the agency, the international market was being monitored and on Wednesday there was a window of opportunity (good timing) to carry out the issuance.
By issuing external debt securities, the government borrows money from international investors with a commitment to return the resources with interest. This means that Brazil will return the money several years from now with the agreed interest rate adjustment of 6.15% per year for securities maturing in ten years.
Spread
The spread, which is the difference between ten-year Brazilian bonds and US Treasury bonds with the same maturity, increased. The rate for Brazilian paper was 285.4 basis points (2.854 percentage points) higher than that for US papers. In the previous issue, in June 2021, the difference had been 240.2 points (2.402 percentage points).
Funds raised abroad will be incorporated into the country’s international reserves on April 13. According to the National Treasury, the main objective of issuing bonds abroad is not to reinforce the country’s currency, but to provide a benchmark for Brazilian companies that intend to raise funds in the international financial market.
