Investors swooped on Brazil’s first sovereign bond deal since 2014 on Thursday, as the country’s deepening corruption scandal bolstered expectations of a change in government.
The country took advantage of a strong rally in global credit to print a US$1.5bn due April 2026 bond at 6.125%, the most it has paid for 10-year funding since 2009.
Investors shrugged off the fact that Brazil (Ba2/BB/BB+) is now junk-rated by all three ratings agencies following a two-notch downgrade by Moody’s last month, pouring in around US$6bn of orders.
The strength of the order book allowed leads Bank of America Merrill Lynch and JP Morgan to tighten pricing to 6.125% from initial thoughts of 6.5%.
That final yield implied a new-issue premium of anything from single digits to 25bp based on where Brazil’s January 4.25% 2025 bonds were trading on Thursday morning.
Brazil Energy Insight 
Leave a comment