By Tiago Pariz
SAO PAULO Jan 9 Brazil's Treasury on Thursday
paid the highest yield ever to launch a new 10-year benchmark
fixed-rate domestic bond, underscoring investor concerns about
the deterioration of the country's fiscal and economic
The Treasury said it sold two million NTN-F bonds maturing
in January 2025, worth 1.64 billion reais ($683 million), at a
yield as high as 13.3899 percent. The bond is expected to become
Brazil's new 10-year benchmark paper.
The yield was considerably above Brazil's base Selic rate,
currently 10 percent, but lower than some analysts had feared.
Most economists forecast the central bank will raise the Selic
to 10.25 percent this month to fight inflation.
The yield was also higher than the 11.55 percent the
Treasury paid in 2012 at the launch of its previous 10-year
NTN-F, and the 13.299 percent it paid in 2010 at the launch of
an NTN-F maturing in 2021.
Still, the result was better than the 13.5 percent yield
many analysts feared the Treasury would be forced to pay.
"It was lower than expected, but it's still a very high
issuance cost for 10-year paper," said André Santoro, an analyst
with Brasif fund manager. "It was a bad result and I don't think
the government will be able to issue at yields much lower than
Investors have been demanding higher returns to buy
Brazilian assets as heightened government spending, slow
economic growth and persistently high inflation have greatly
reduced the allure of Latin America's largest economy.
Fears that President Dilma Rousseff will be unwilling to cut
back on spending in an election year have led many analysts to
bet that Brazil's debt may be downgraded by at least one rating
agency this year.