Brazil Buys US$ 1 Billion Abroad to Add to Reserves

    Brazil’s Federal Treasury announced that it had acquired US$ 1 billion
    through the sale of bonds denominated Global 2015. The operation was headed by
    two banks: Citigroup Global Markets Inc. and JP Morgan Securities Inc. The
    asking price was 99.829% of par, offering a 7.90% rate of return to investors.

    The financial settlement of the operation is scheduled for March 7, and
    interest payments will be made on September 7 and March 7 of each year until the
    bonds are due, on March 7, 2015.

    The bonds were issued to bolster the country’s international reserves, with
    an eye towards the amortization of foreign debt, but the resources may also be
    used by the Central Bank for currency market interventions.

    It was determined last year that the country would acquire US$ 6 billion to
    add to its reserves. So far bonds have been issued in yens, euros, and dollars,
    totaling approximately US$ 4.5 billion.

    Foreign Debt

    In January, Brazil’s balance of payments (summarizing the country’s economic
    transactions with the rest of the world) achieved a US$ 2.005 billion surplus,
    in consequence of a US$ 818 positive balance in current transactions (flows
    involving goods and services) and a US$ 1.187 billion surplus in financial
    accounts (monetary flows between Brazil and the rest of the world).

    These figures appeared in a report on the Foreign Sector released February 21
    by Brazil’s Central Bank (BC). Emphasis is given to January’s US$ 2.183 billion
    trade surplus and the influx of US$ 1.218 billion in foreign investments. The BC
    report also noted that Brazil’s international reserves rose US$ 1.087 billion in
    January, raising the total to US$ 54.022 billion.

    According to the BC’s Economic Department, in November, 2004, Brazil’s
    foreign debt came to US$ 203.527 billion.



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