Officials from Brazil's national treasury are travelling nationwide singing the praises of federal domestic debt to pension fund managers. Later roadshows will sell the same story to insurance companies. They are stressing increased transparency, lower risk, higher earnings potential and a longer yield curve.
"We are confident that what we are selling is the best product on the market," says Fabio Barbosa, assistant secretary for public debt at the treasury, "but there is still a big gap between the longest maturity of treasury notes and debt traded on international markets. We need to be able to offer a full range of maturities to optimize our own financial structure and to meet the demands of the market."
There is a long way to go. The longest treasury paper maturity is 36 months, offered since January 30 on the floating-rate NTN-D (treasury note D series), which carries 6% annual interest plus variation in the offer price of the US dollar.
The longest fixed-rate maturity is just 12 months, offered since last September on treasury letters (LTN), sold at electronic auctions and with interest determined by discount against face value. This, the treasury claims, is the first time in history that a one-year, fixed-rate bond has been launched successfully on Brazilian markets, and the first time it has even been attempted since the 1970s.