Brazil seeks 30-yr bond yield near 6 pct

By Guillermo Parra-Bernal/Reuters

The Brazilian government could offer at least $1 billion in new global bonds maturing in February 2047 at a yield in the “very low 6 percent area,” a person directly involved in the deal said on Thursday, signaling growing optimism among investors on the outlook for Latin America’s largest economy.

Brazil’s National Treasury hired the investment-banking units of Deutsche Bank AG, Goldman Sachs Group Inc and HSBC Holdings Plc to manage the transaction. In a statement, the Treasury said the bond sale could be concluded later in the day.

According to the source, who asked for anonymity as the deal is in the works, policymaking proposals by interim President Michel Temer to cut spending and curb debt growth are luring investors back into the nation’s debt. A recent ease in global market volatility could facilitate Brazil’s move to set up a new benchmark for 30-year bonds, the source added.

The government last tapped international bond markets in March, when it sold $1.5 billion in bonds maturing in 2026 at a yield of 6.125 percent. The 6 percent bond traded on Thursday at a price of 109.25 cents on the dollar to yield 4.77 percent.

According to Credit Suisse Group AG’s SBI Brazil index, a gauge of relative borrowing costs for Brazilian sovereign bonds, the country’s debt spread has narrowed to about 1.8 percentage point over comparable U.S. debt this month from about 2.4 points in March. (Additional reporting by Patricia Duarte in São Paulo; Editing by Bill Trott)

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