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Brazil issues global bonds

October 9, 2017

Brazil’s National Treasury issued $3 billion in bonds abroad last week.

(full report attached)
 

BRL outperformed its peers 

The Brazilian currency outperformed its peers early in the week. However, the pick-up in hourly earnings in the U.S. reinforced expectations of higher interest rates before year-end and pressured currency markets later in the week. The exchange rate closed the week at 3.16 reais per U.S. dollar, depreciating 0.2% (Charts 1, 2, 3 and 4).

Central Bank did not intervene in the FX market 

The monetary authority did not intervene in the FX market last week. Its stock of FX swaps now stands at $24 billion (Charts 5 and 6). 

Currency inflows in September 

After three consecutive months of outflows, the currency flow was positive by $2.5 billion in September. Last week, however, the flow was negative, as $1.9 billion financial outflows outsized $1.4 billion trade inflows (Charts 7 and 8).

National Treasury issued bonds abroad

Brazil’s National Treasury issued $3 billion in bonds abroad last week. Of the total amount, $1.5 billion will be payed with old securities. Additionally, a petrochemical company placed two offerings in the external market: $500 million in bonds due in 2022 and $1.25 billion in bonds due in 2027. Brazilian bond offerings abroad total $24.5 billion in the year through September, already topping the $20.4 billion issued during 2016 as a whole (Chart 9 and table).

Foreign flows to the stock market are negative in October

Foreign flows to the stock market are negative by $518 million this month, as $561 million outflows from the futures market outsized $43 million inflows to the spot market (Chart 10).

Material changes in investors’ FX derivatives positions

Last week, non-residents reversed a $4.9 billion short position in dollar futures into a long position of $1.1 billion. Their long position in cupom cambial, of $16 billion, shrank to $11 billion. Institutional investors boosted their short position in dollar futures by $6 billion, while reducing their FX swap position by $2.7 billion. Non-residents, banks and institutional investors hold positions of $14.0 billion, $14.9 billion and -$ -6.4 billion, respectively (Charts 11, 12, 13 and 14).



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