Brazilian inflation-linked bonds may appreciate as the country’s economy grows and its credit profile improves, according to Alessandro Ghidini from Swiss & Global Asset Management Ltd.
The real yield on inflation-linked bonds, whose principle is adjusted to compensate for consumer price rises, may fall by about 1 percentage point over the next year or so as the bonds rise in value,
Ghidini, who helps manage about $1.2 billion in emerging-market debt for Swiss & Global, said in a phone interview yesterday.
“Brazil is undergoing a tremendous improvement in terms of the economy, in terms of debt profile,” Ghidini said.
The fall in yields may occur across all maturities for Brazilian inflation-linked bonds, he said. A Brazilian government inflation-linked bond due in August 2030 yielded 6.4 percent on top of inflation today, according to data compiled by Bloomberg.
Brazil’s gross domestic product may expand by 4.5 percent this year and its gross government debt remain stable at about 66 percent of GDP, according to the International Monetary Fund’s World Economic Database in April.
The yield on Mexico’s 30-year inflation-linked bond may also fall to 3.7 percent or 3.6 percent from about 4 percent now, he said. Inflation-linked bonds from South Korea and Turkey were less attractive investments at current prices, he said.
To contact the reporter on this story: Jason Webb in London at jwebb25@bloomberg.net.
Buy Brazil Inflation-Linked Bonds, Swiss & Global Says
By - Apr 27, 2011 9:21 AM ET
About Me
- Waldemar Jezler
- For over 30 years, Brazilian-American investment banker Waldemar Jezler has worked in the finance sector. Jezler earned his Bachelor's degree in Civil Engineering from the University of São Paulo in Brazil and then went on to attend Harvard Business School for his MBA. While at Harvard, Jezler was highly involved in extracurricular activities, including a term as President of the Ibero American Club.