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 Credit Lyonnais Securities (USA)

Brady Bond Trading Recap

contributed by Credit Lyonnais Securities (USA) Inc.

Wednesday, February 2 2000

Daily Brady Bond Trading Commentary

There was virtually no reaction in emerging markets to the FOMC rate decision, indicating that nervousness still reigns ahead of Friday's employment report. We believe that new supply has and will continue to keep prices under pressure. Dealer books came into the year on the long side and suffered January's 100 bps spread widening, and most other speculative players have remained quiet. Institutional fund managers, who boosted allocations during Q4 1999, are in no rush to add paper in a rising interest rate environment (the inversion at the long end of the Treasury curve notwithstanding). Meanwhile, the Brazilian Federal Government has indicated that it will not cover any of the US$108 million in Eurobond payments that the state of Minas Gerais has coming due on February 10. The news of a possible default by the state has not shaken the market this time around, and reactions to the government's tough stance have been positive.

This report was prepared by Credit Lyonnais Securities (USA) Inc. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Returns set forth in this report are estimates based on internal assumptions, and any changes in these assumptions may have material impact on such estimated returns. This is not a solicitation or any offer to buy or sell securities. We, our affiliates, and any officer, director or stockholder or any member of their families, may have a position in and may from time to time purchase or sell any of the above mentioned or related securities.
 

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