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Deals of the year: Latin America

Western Europe  | Emerging Europe | Asia | North America

Best sovereign bond

Brazil

Type of deal: 43-month bond

Deal size: $1 billion

Date: April 2003

Advisers: UBS Warburg, Merrill Lynch

Latin debt had a banner year in 2003 and there's no doubt which deal set the ball rolling. When Brazil issued its $1 billion 2007 bond at the end of April, it set the tone for the entire year.

The bond was a blowout: the leads received $7.3 billion in orders from 427 different participants in just 90 minutes. Of these would-be investors, 89 went away empty-handed, with no bonds at all. When they looked to other parts of Brazil's curve to try to pick up debt on the secondary market, they found something astonishing: far from widening in response to the $1 billion of new supply, the entire curve had tightened in by about 25 basis points overnight.

The maturity of the bond was unusual. At three years and seven months, it was very short-dated for a large sovereign issuance, and didn't mature in the normal multiple of one year. Also unusual were the collective action clauses that Brazil included in the bond: at 85%, they were 10 percentage points higher than the 75% that the markets had seemed to accept as standard.

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