JUSTIÇA DE SÃO PAULO DETERMINA QUE O MUNICIPIO AUTORIZE A EXPEDIÇÃO DE NOTAS FISCAIS ELETRÔNICAS.
9 de fevereiro de 2024
Por que Rússia deve crescer mais do que todos os países desenvolvidos, apesar de guerra e sanções, segundo o FMI
18 de abril de 2024Brazilian local government debt sales fell to a 17-month low in May after Europe’s debt crisis drove up emerging-market borrowing costs.
The Treasury raised 12.5 billion reais ($6.9 billion) of the 18.6 billion reais offered in weekly auctions, down from an average of 26.9 billion reais in the first four months and the smallest amount since December 2008. President Luiz Inacio Lula da Silva’s government scrapped two sales of fixed-rate bonds due 2021 after receiving no bids it found acceptable. Yields on the notes rose as much as 71 basis points, or 0.71 percentage point, to 13.2 percent before falling to 12.67 percent on May 28.
“At this time of high volatility, we have this strategy of reducing our sales,” Deputy Treasury Secretary Paulo Valle said in a telephone interview from Brasilia on May 28.
While Valle said Brazil has enough cash to cover six months of spending without selling debt, the Treasury announced plans on May 28 to increase local issuance to 45 billion reais in June to help pay back 50.4 billion reais of debt maturing in the month. The extra yield investors demand to buy emerging-market dollar debt instead of U.S. Treasuries has jumped 60 basis points this month to 325 basis points, according to JPMorgan Chase & Co.
Brazil needs to step up sales to avoid eroding cash reserves before October’s presidential elections, said Carlos Eduardo Olinto, who helps oversee 3 billion reais at Mercatto Gestao de Recursos in Rio de Janeiro.
‘Calmer Moments’
“The Treasury should take advantage of calmer moments to go ahead and issue debt,” Olinto said in a phone interview. The elections “could cause some volatility” and the government “can’t count on the crisis ending soon,” he said.
Central bankers increased the benchmark lending rate to over 20 percent ahead of Lula’s 2002 election victory to stem capital flight that sent the real to a record low of 3.95 per dollar. Yields on the government’s dollar bonds due in 2040 surged to over 26 percent that July from 15.84 percent a year earlier on concern Lula would default after taking office.
The bonds rallied ahead of Lula’s re-election four years later as the yield reached a then-record low of 8.09 percent by that December. Dilma Rousseff, Lula’s former cabinet chief, and Jose Serra, a former Sao Paulo state governor, are the leading candidates to replace Lula, who is ineligible to run for a third term, polls show.
“This election won’t be a non-event like the 2006 election nor the mega-event that was the 2002 election,” Olinto said. “But during the campaign, an issue could come up that causes some volatility.”
Rising Yields
Yields on the 2040 bonds, one of the most-traded Brazilian bonds in international markets, rose four basis points last week to 8.09 percent and climbed 28 basis points from a record low of 7.81 percent on March 23, according to JPMorgan.
The extra yield investors demand to own Brazilian government dollar bonds instead of Treasuries narrowed last week to 235 basis points. The gap has swelled by 68 since touching a 2 1/2-year low of 167 on April 15 on concern the global economic recovery will slow as Europe’s most-indebted countries struggle to finance their budget deficits.
The cost of protecting Brazilian debt against non-payment for five years with credit-default swaps fell 13 basis points last week to 135, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
The real gained 2 percent in the week to 1.8171 per dollar, trimming its loss this year to 4 percent.
Rate Outlook
The yield on Brazil’s interest-rate futures contract due in January rose six basis points to 10.99 percent, implying traders predict the central bank will raise the benchmark rate to about 12 percent by year-end from 9.5 percent today to stem inflation as growth quickens in Latin America’s biggest economy.
Yields on fixed-rate real-denominated bonds due in 2014 dropped five basis points to 12.46 percent, according to data compiled by Bloomberg. The yield has declined 57 basis points since reaching a 15-month high of 13.03 percent on May 6.
Brazil has 280 billion reais of local debt maturing this year, according to the Treasury’s annual financing plan. In May, 7.7 billion reais of local debt matured.
Valle said that prior to the slowdown in bond issuance this month, the government had been selling debt in the “upper” range of its sale program.
“We’ve been carrying out our program under the most optimistic scenario,” he said. “Our cash position is comfortable.”