UPDATE 1-Brazil global debt offer to hinge on market volatility-official

Tue Feb 26, 2013 1:09pm EST

* Risk aversion key to determine Brazil's next debt sale

* Brazil's first global debt sale of year could take longer

* Domestic problems also weigh on investors' uncertainty

BRASILIA, Feb 26 (Reuters) - Brazil will sell global bonds when market volatility subsides, Treasury chief Arno Augustin said on Tuesday, signaling that a spike in risk aversion is weighing on the country's decision to offer paper abroad.

Augustin's comments come a day after a government official told Reuters that market conditions were "not good" for a debt sale in the short-term, reaffirming views that the country's next global debt offer could take some time.

"The timing will depend on lower volatility," Augustin told reporters in Brasilia. "We are evaluating and we should (sell) in the coming weeks to show that the fundamentals of Brazil are solid."

Investors' aversion to risk in major emerging markets rose to levels not seen since the end of November when markets were worried about a looming U.S. fiscal cliff, according to JP Morgan's benchmark EMBI Plus index.

Risk aversion has risen this week as the prospect of a political stalemate in Italy could mean more trouble for an already crisis-stricken Europe.

In September, Brazil sold $1.35 billion 10-year global bonds to yield 2.686 percent, the lowest rate ever, as developed-world investors sought emerging-market yields more than bonds in their home markets.

Since then yields of Brazilian global bonds have risen steadily on growing risk aversion as well as the perception that the country's credit standing has weakened from two years of low economic growth and high inflation.

Brazil will not sell debt abroad unless financing terms improve from that last sale, a government official said on condition of anonymity.

Brazil's benchmark 10-year global bond currently yields at 3.027 percent.

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