(Updates with comments from Treasury secretary)
BRASILIA, March 27 The Brazilian government
raised 1 billion euros ($1.37 billion) from the sale of new
seven-year global bonds on Thursday in a bold move following
this week's cut to the nation's sovereign debt rating by
Standard & Poor's.
The government sold the securities at a price of 99.464
cents on the euro to yield 2.961 percent, or 1.65 percentage
points over the benchmark mid-swaps rate, the National Treasury
said in a statement.
Borrowing costs tightened from initial guidance for a spread
of 1.75 percentage points above the mid-swaps rate.
The notes, which bear a coupon interest rate of 2.875
percent, mature on April 21, 2021.
The transaction was the Brazilian government's first
euro-denominated issue since 2006. Before the issue, Brazil had
800 million euros outstanding in euro-denominated bonds, all
maturing in February 2015.
Treasury Secretary Arno Augustin called the bond sale a
"very positive" development, adding that it showed confidence in
the strength of the country's economic fundamentals.
Volatility in global markets will likely decline during 2014
and the Brazilian government plans to sell more bonds this year,
The investment banking units of Banco do Brasil SA
, Banco Santander SA and JPMorgan Chase & Co
managed the transaction.
According to a government official with direct knowledge of
the deal, the Treasury decided to take advantage of a decline in
borrowing costs in euro-denominated securities. The issue was
not "meant as a message to S&P," the official said, referring to
the rating company's decision to lower Brazil's debt rating a
notch to ""BBB minus", the lowest investment-grade ranking.
(Reporting by Nestor Rabello; Writing and additional reporting
by Guillermo Parra-Bernal and Silvio Cascione; Editing by John
Stonestreet, Peter Galloway and Bernard Orr)