Brazil is considering a return to the US dollar bond market shortly with a re-opening of either its 2025 or 2034 global bonds.
Both transactions underperformed the rest of the Brazilian curve in anticipation of the sovereign looking to pounce on what could end up being a fleeting window of opportunity to issue before the late November Thanksgiving holiday.
Yesterday (Thursday), the 2025s were yielding 8.50% and the 2034s 8.51%. Brazil would do at least $500m, said bankers.
The sovereign is also expected to continue building out its Brazilian real denominated global bond yield curve in the ensuing months.
Although its $1.5bn equivalent 10 year Brazilian real benchmark in September is still yielding more, at 13.48% than its 12.75% yield at launch, investors are still interested in getting a play on the country's declining interest rates.
"I am sure we will see more government real issuance," said a portfolio manager at an investment firm in London. "You will see a huge amount of interest rate cutting in Brazil. Brazilian interest rates are just way too high."
Separately, Venezuela has served notice it plans to reduce the stock of its public debt to 25% of GDP from a current 35%.
The country's finance minister, Nelson Merentes, said this week the administration wanted to swap bonds with high coupons for capitalising securities.
"We don't believe the government is seeking to engage in a 'haircut' type of plan, but rather a combination of buybacks and liability management, at least for external debt," said Merrill Lynch in its daily emerging market report.