By Antonio Guerrero
Taking advantage of falling yields, Brazilian borrowers are returning to international debt markets. BNDES, the state-owned development bank, sold $1 billion in 10-year bonds in June, yielding 6.546%. The deal, managed by HSBC and Goldman Sachs, allows the bank to increase its loan portfolio. BNDES last came to market with $1 billion in 10-year notes in May 2008, with a 6.4% coupon, ending a seven-year market hiatus. BNDES's international bonds are rated BBB- by S&P and Baa3 by Moody's.
The Brazilian government denied press reports alleging it would reinstate a 1.5% IOF financial transactions tax on bonds acquired by foreign investors. The tax was eliminated last October, and finance minister Guido Mantega says the government welcomes foreign purchases of Brazilian bonds and will not introduce measures that jeopardize capital inflows.
An 11-member senate panel launched an inquiry into Petrobras, the state-controlled oil company, as opposition parties charge it evaded more than $2 billion in taxes and engaged in procurement fraud. The investigation is slated to continue through year-end. Though CEO José Gabrielli denies any malfeasance, the probe could hurt share prices and pose challenges for financing the company's $174.4 billion investment program.