Brazil issues $500 million of 2037 bonds in exchange for old debt

By Reshmi Basu

New York, Aug. 3 - The Federative Republic of Brazil said it would issue an additional $500 million of 7 1/8% bonds due 2037 via a reverse modified Dutch auction. The amount falls short of the maximum $1.5 billion the government offered to buy back on July 27.

Brazil announced Wednesday that it would issue the 2037 bonds at a spread of 205 basis points over Treasuries as part of its proposal to buy back existing bonds with maturities ranging from 2020 to 2030.

The 2037 global bond's reoffer price is $996.84 per $1,000 principal amount.

The amount of existing bonds bought and the prices were:

• 12¾% dollar-denominated global bonds due 2020; $8.72 million at $1,493.73 per $1,000 principal amount; clearing spread is 14 basis points below 5.10% reference yield;

• 8 7/8% dollar-denominated global bonds due 2024, $44.34 million at $1.171.33 per $1,000 principal amount and a clearing spread of zero;

• 8 7/8% dollar-denominated global bonds due 2024, series B, $62.89 million at $1,171.33 per $1,000 principal amount and a clearing spread of zero;

• 10 1/8% dollar-denominated unsecured global bonds due 2027; $48.58 million at $1,313.71 per $1,000 principal amount; clearing spread is 4 basis points above 5.10% reference yield; and

• 12¼% dollar-denominated global bonds due 2030; $335.81 million at $1,576.85 per $1,000 principal amount with a clearing spread of zero.

Settlement is scheduled for Aug. 16.

Citigroup (800 558-3745 or call collect 212 723-6108) and Deutsche Bank (866 627-0391 or call collect 212 250-2955) are the dealer managers for the transaction.

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