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Brady Bond Trading Recap

contributed by Credit Lyonnais Securities (USA) Inc.

Wednesday, February 23 2000

Daily Brady Bond Trading Commentary

After a period of very quiet trading, Brazil bonds started to see demand although investors concentrated on the most liquid bonds, namely C bonds and EIs. However, overall markets remain subdued. The continued threat of higher interest rates will make investors cautious of Emerging Markets. This caution may change if Mexico receives an upgrade as this will permit a wider audience for their bonds.

Mexico is expected to grow by more than 4.5 percent this year and to see a decline in inflation which will be further evidence of economic progress. At the same time, many countries are looking to access the market in the event of better market conditions so investor gains will be capped by any new issuance. Brazil has announced that it will be issuing a Yen denominated bond and we may well see other countries tapping the markets in other than US Dollars. 

There are also strong rumors that Brazil is looking to do a 30 year US Dollar denominated global bond in the amount of US$ 1 billion. Given that the investor base is not increasing at the moment, issuance of this size, combined with pent-up corporate issue, can only serve to dampen enthusiasm for committing more than a part of available investment funds at this time.

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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