Brazil Launches $500M 2019 Reopened Bonds At 4.75%

Brazil Launches $500M 2019 Reopened Bonds At 4.75%
NEW YORK (Dow Jones)--Brazil launched $500 million of 2019 global bonds at 4.75% Tuesday, according to a person familiar with the deal.

The Brazilian Treasury announced Tuesday the reopening of its 2019 global sovereign bond, expanding the current $1.775 billion issue by $500 million. The coupon is 5.875%.

The books on the deal for New York and Europe were closed at about 11 a.m. EST and were said to be oversubscribed.

However, people familiar with the matter said the treasury has no intention of increasing the amount of the offer, even in the event of heavy demand.

The issue may only be increased during the Asian trading session by up to 5% for investors unable to participate during this time zone.

Morgan Stanley and Goldman Sachs are joint bookrunners on the issue.

Dedicated emerging-market investors weren't keen on participating, even though most are broadly optimistic on Brazil's economy as a whole.

'Brazil as country, we're quite bullish on fundamentals,' said one big fund manager. 'But the market has more than priced that in. So, generally, we're underweight Brazil.' However, they said that the fund will use this reopening to rebalance its portfolio.

Kevin Daly, an emerging market portfolio manager at Aberdeen Investment Managers in London, said: 'Brazil just doesn't yield anything. It's just ridiculously low.'

Interested investors are likely global government bond funds, crossover investors, and those that need to rebalance their portfolios if they have too much cash at the end of the year, he said.

Brazil first issued the 2019 bond in January with a volume of $1.025 billion. The bond came with a coupon rate of 5.875% and a yield of 6.13%. In May, the treasury reopened the 2019 bond, raising an additional $750 million at an annual yield of 5.8%.

Earlier this month, Treasury Secretary Arno Augustin told Dow Jones Newswires that Brazil's government was likely to issue another 10-year overseas bond before the end of the year.

'We are looking to build a better yield curve and improve the quality of our debt management,' Augustin said at that time.

Brazil's is enjoying its investment grade status to access the debt market. In September, Moody's Investors Service raised Brazil's sovereign credit rating to Baa3, an investment-grade rating, more than a year after Standard & Poor's and Fitch Rating elevated Brazil to investment grade.



-By Riva Froymovich, Dow Jones Newswires; 212-416-2217; riva.froymovich@dowjones.com

-By Tom Murphy and Rogerio Jelmayer, Dow Jones Newswires; 55-11-2847-4519; brazil@dowjones.com"