UPDATE 2-Brazil raises 1 bln euros with new bond after downgrade

jueves 27 de marzo de 2014 16:08 GYT

(Updates with comments from Treasury secretary)

BRASILIA, March 27 (Reuters) - The Brazilian government raised 1 billion euros ($1.37 billion) from the sale of new seven-year global bonds on Thursday in a bold move following this week's cut to the nation's sovereign debt rating by Standard & Poor's.

The government sold the securities at a price of 99.464 cents on the euro to yield 2.961 percent, or 1.65 percentage points over the benchmark mid-swaps rate, the National Treasury said in a statement.

Borrowing costs tightened from initial guidance for a spread of 1.75 percentage points above the mid-swaps rate.

The notes, which bear a coupon interest rate of 2.875 percent, mature on April 21, 2021.

The transaction was the Brazilian government's first euro-denominated issue since 2006. Before the issue, Brazil had 800 million euros outstanding in euro-denominated bonds, all maturing in February 2015.

Treasury Secretary Arno Augustin called the bond sale a "very positive" development, adding that it showed confidence in the strength of the country's economic fundamentals.

Volatility in global markets will likely decline during 2014 and the Brazilian government plans to sell more bonds this year, Augustin said.

The investment banking units of Banco do Brasil SA , Banco Santander SA and JPMorgan Chase & Co managed the transaction.

According to a government official with direct knowledge of the deal, the Treasury decided to take advantage of a decline in borrowing costs in euro-denominated securities. The issue was not "meant as a message to S&P," the official said, referring to the rating company's decision to lower Brazil's debt rating a notch to ""BBB minus", the lowest investment-grade ranking.

($1=0.729 euros) (Reporting by Nestor Rabello; Writing and additional reporting by Guillermo Parra-Bernal and Silvio Cascione; Editing by John Stonestreet, Peter Galloway and Bernard Orr)