UPDATE 3-Brazil rides rally with new long 30-year bond
(Adds investor comments; updates pricing and book size)
By Paul Kilby
NEW YORK, July 21 (IFR) - Brazil returned to US dollar bond markets on Thursday after a four-month hiatus, taking advantage of a broader EM rally and growing optimism about the country's turnaround story.
After amassing a US$6bn book, the country launched a US$1.5bn long 30-year bond at 5.875%, coming inside the 6.125% yield it achieved on a 10-year bond in March.
While that appeared far too rich for some accounts, a good number of investors were keen to take a long-term view on what they see as an improving credit story in Brazil.
"Brazil is moving in the right direction," said Paulo Clini, head of investments, Sao Paulo, at Western Asset Management. "Economic indicators have started to improve and the political transition will allow the country to address fiscal imbalances."
A confluence of factors have helped lift Brazilian assets in recent months after being beaten down by a series of downgrades to junk as the country fell into its deepest recession in decades.
Investors have largely cheered efforts by acting president Michel Temer to impose austerity measures and turn around Latin America's largest economy after appointing former central bank head Henrique Meirelles as finance minister.
Spreads on Brazil's five-year credit default swaps have tightened around 75bp to 279bp since late May after business friendly Temer replaced his leftist predecessor Dilma Rousseff. Continuación...