UPDATE 4-Brazil launches $1 bln in 2045 bonds, offers to buy back other debt

(Recasts throughout; adds size and return rate of 2045 global bond issue, byline) BRASILIA/SAO PAULO, July 23 (Reuters) - Brazil's Treasury launched $1 billion worth of a new 30-year benchmark global bond on Wednesday and offered to buy back costlier, shorter-dated maturities as it seeks to take advantage of a growing appetite for Brazilian assets. The deal aims to facilitate future debt issues by Brazilian companies, whose bonds are often priced in accordance with the country's sovereign yield curve, or the returns paid on different government bond maturities. "That creates a new point in the (yield) curve, withdrawing bonds that are not a good reference anymore," said a source with direct knowledge of the deal. The Treasury launched at least $1 billion of the new bond due in January 2045, paying investors a yield 187.5 basis points above comparable U.S. Treasuries, Thomson Reuters' IFR reported. The deal does not mean the government has given up plans to issue a yen-denominated bond this year, the source said. Initially, Brazil had offered to sell the 2045 bond at a premium of around 200 basis points over Treasuries. It was later able to lower that offer as demand for the new bond reached $4.5 billion, IFR said. The Treasury earlier confirmed it mandated banks to sell a new global bond due in January 2045 and to buy back issues maturing from 2024 to 2041 but gave no other details. Brazilian stocks and domestic bonds have rallied in recent weeks as opinion polls pointed to a tighter presidential race, fueling speculation an opposition candidate could defeat President Dilma Rousseff in October. Investors accuse Rousseff, a center-left politician, of excessive intervention in the economy. Currently, there are a combined $11.9 billion in notes maturing in 2024, 2025, 2027, 2030, 2034, 2037 and 2041. Brazil has offered to repurchase those bonds, offering premiums that range from 50 basis points to 176 basis points over comparable U.S. Treasuries, according to IFR. Bank of America Merrill Lynch, Deutsche Bank and Itau are handling the deal, another source with direct knowledge of the deal said. An additional $50 million worth of the 2045 bond will be offered to Asian investors after the deal closes during New York hours.

Bonds being repurchased by the Brazilian Treasury:

Bond Maturity Coupon Buy-back Outstanding (pct) guidance amount

(bps over USD Treas)

Global 2024 April 15, 8.875 50 1,145,684,000.00


Global 2024 B April 15, 8.875 50 95,037,000.00


Global 2025 Feb 4, 8.750 66 1,043,516,000.00


Global 2027 May 15, 10.125 84 1,396,058,000.00


Global 2030 March 6, 12.250 126 466,450,000.00


Global 2034 Jan 20, 8.250 174 1,956,412,000.00


Global 2037 Jan 20, 7.125 176 2,870,304,000.00


Global 2041 Jan 7, 5.625 173 2,925,000,000.00


(Reporting by Guillermo Parra-Bernal, Luciana Otoni and Patrícia Duarte; Editing by Paul Simao, Dan Grebler and Tom Brown)