LONDON STOCK EXCHANGE CELEBRATES BRAZIL'S DEBUT SUSTAINABILITY BOND
Today the London Stock Exchange welcomes the Federative Republic of Brazil’s debut USD 2 billion sustainability bond to its International Securities Market and Sustainable Bond Market.
The Brazilian federal government actively participates in both local and international markets. In the domestic arena, it issues various bond types, including fixed-rate, inflation-linked, and floating-rate bonds. Weekly auctions determine bond issuance, aiming to enhance yield curves, diversify investors, and extend debt maturity.
Externally, the National Treasury strategically accesses international markets to create and maintain liquid benchmarks. These benchmarks serve as references for Brazilian companies seeking global access and contribute to diversifying the investor base within the country. Although external debt represents only about 5% of Brazil's total sovereign debt, its qualitative significance is substantial.
In November 2023, Brazil achieved a significant milestone by issuing its first sustainable bond—a 7-year dollar-denominated bond with a yield of 6.5% and spread of 182 basis points. This issuance marked the construction of a “sustainable” reference curve alongside the existing “regular” yield curve, both designed to guide Brazilian issuers.
The Brazilian Debt Management Office (DMO) prioritizes operational excellence, liquidity enhancement, and transparency. By linking financial activities to positive environmental and social impact, Brazil aligns itself with global sustainability goals. The National Treasury actively optimizes the external yield curve through qualitative bond issuances, contributing not only to capital raising but also to broader economic and social objectives.
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