The bonds from Brazil

摘要

Apart from citizens of Brazil and the rarefied folk that deal in international bonds, few will have heard of, much less care about, that country's dollar-denominated 11% bond, which matures on August 17th 2040. In fact, it is rather important. Since this is the country's benchmark bond and Brazil is the biggest debtor among emerging countries, it has become the benchmark bond for all emergingmar-kets. Even by the exacting standards of such markets, Brazil's 11% '40 is stomach-churningly volatile. As a much-favoured play for investors fleeing small yields on American Treasuries, the price of the bond rose from 43 cents per dollar of face value in late 2002 to 120 cents in January, dragging yields from 26.7% to 9.5%. Since then the bond's price has fallen by 30% or so, and this week touched a low of 83 cents.