Brazil Buys US$ 1 Billion Abroad to Add to Reserves

Brazil’s Federal Treasury announced that it had acquired US$ 1 billion
through the sale of bonds denominated Global 2015. The operation was headed by
two banks: Citigroup Global Markets Inc. and JP Morgan Securities Inc. The
asking price was 99.829% of par, offering a 7.90% rate of return to investors.

The financial settlement of the operation is scheduled for March 7, and
interest payments will be made on September 7 and March 7 of each year until the
bonds are due, on March 7, 2015.


The bonds were issued to bolster the country’s international reserves, with
an eye towards the amortization of foreign debt, but the resources may also be
used by the Central Bank for currency market interventions.


It was determined last year that the country would acquire US$ 6 billion to
add to its reserves. So far bonds have been issued in yens, euros, and dollars,
totaling approximately US$ 4.5 billion.


Foreign Debt


In January, Brazil’s balance of payments (summarizing the country’s economic
transactions with the rest of the world) achieved a US$ 2.005 billion surplus,
in consequence of a US$ 818 positive balance in current transactions (flows
involving goods and services) and a US$ 1.187 billion surplus in financial
accounts (monetary flows between Brazil and the rest of the world).


These figures appeared in a report on the Foreign Sector released February 21
by Brazil’s Central Bank (BC). Emphasis is given to January’s US$ 2.183 billion
trade surplus and the influx of US$ 1.218 billion in foreign investments. The BC
report also noted that Brazil’s international reserves rose US$ 1.087 billion in
January, raising the total to US$ 54.022 billion.


According to the BC’s Economic Department, in November, 2004, Brazil’s
foreign debt came to US$ 203.527 billion.


ABr

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