Brazilian Federal Public Debt -BEST Brazil

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Brazilian Federal Public Debt -BEST Brazil Powered By Docstoc
					                                                                   March 2007




Brazilian Federal Public Debt – BEST Brazil




                                                     Paulo Valle
                                              Brazilian National Treasury
    Ministry of Finance


Transparency & Predictability
An approach to effective communication and enhanced transparency
An approach to effective communication and enhanced transparency

Regular publications

     •Annual Borrowing Plan (7th year)

     •Public Debt Annual Report

     •Auctions Schedule - Monthly

     •Federal Public Debt Monthly Report- Statistics

     •Debt Reports (Relevant news on debt management)

     •The National Treasury Fiscal Result

Brazil – the first country that satisfied all the investor relations best practice criteria in Institute of
International Finance (IIF) report

     •Staff reachable through website

     •Reciprocal links between government agencies

     •Investors able to register for website subscription

     •Investor’s conference call

     •Regular self-assessment of investor relations activities.

                                                                                                              1
                                Ministry of Finance


                             Annual Borrowing Plan 2007
                             2007 Guidelines
                             2007 Guidelines

                                 Lengthen the DPF average maturity, primarily by increasing the average term of the securities
                                issued in auctions;

                                 Reduce the share of debt due in 12 months, thus reducing refinancing risk;

                                 Gradually replace Selic-linked and FX-linked bonds by fixed rate and price index ones, thus
                                reducing the market risk;

                                 Issue foreign currency bonds based on qualitative aspects, observing market conditions;
ANNUAL BORROWING PLAN 2007




                                 Stimulate the development of the yield curves for federal public securities on domestic and
                                external markets; and

                                 Broaden the investor base.




                                                                                                                                 2
                             Ministry of Finance


                         Annual Borrowing Plan 2007
                         Domestic Federal Public Securities Debt (DPMFi) Strategy
                         Domestic Federal Public Securities Debt (DPMFi) Strategy

                          Fixed Rate Bonds: increase in the participation of this instrument, lengthening the issuance average maturity. The LTN will have
                          benchmarks maturing in 6, 12 and 24 months while the NTN-F will have maturities of 3, 5 and 10 years.

                          Floating Rate Bonds (basic interest rate – Selic): net redemptions and maintenance of average maturities at issuance on similar
                          levels to those observed in 2006 (approximately 44 months);

                          Price Index Bonds: Exclusive NTN-B issuance. Existing maturities by end 2006 (3, 5, 10, 20, 30 and 40 years) will be maintained.
                        Nevertheless, new maturity dates may be created for adjustment to the benchmark structure. There will be no issuance of NTN-C;

                          Exchange Rate Bonds: As has happened since 2003, no NTN-D issuance – FX-linked security - is planned for 2007.

                         Federal External Public Debt (DPFe) Strategy
                         Federal External Public Debt (DPFe) Strategy

                           Development of the Real yield curve in the external market;

                           Creation and refining of benchmark points on the dollar yield curve; and
ANNUAL BORROWING PLAN




                           Maintenance of the buy-back program, observing market conditions, as well as the strategy of correcting the foreign yield curve
                           distortions.


                                                   THE PROGRAM, NOW IN A PERMANENT BASIS, WILL COVER ALL FEDERAL
                                                   EXTERNAL PUBLIC DEBT BONDS, INDEPENDENTLY OF THEIR MATURITIES.
                                             As from 2007, the Early Redemption Program will be carried out by the National
                                                                       Treasury’s operations desk
                                                                                                                                                             3
                                Ministry of Finance


                          Annual Borrowing Plan 2007
                         Federal Domestic Debt Indicators
                         Federal Domestic Debt Indicators
                                                                                                                                                                                                                     2007
                                                         Indicators                                            2003                2004               2005               2006              Jan-07
                                                                                                                                                                                                           Minimum     Maximum
                        Stock of DPMFi held by the public (R$ billion)                                         731.4              810.3               979.7             1,093.5            1,087.9           1,230.0      1,300.0
                        Average Maturity of DPMFi (months)                                                      31.3               28.1                27.4               31.1               31.9              32.0         36.0
                        % Maturing in 12 months                                                                 35.3               46.1                41.6               35.7               36.9              29.0         33.0
                                          Share of DPMFi (%)
                                              Fixed rate                                                        12.5               20.1                27.9               36.1               34.5                37.0         43.0
                                             Price Index                                                        13.6               14.9                15.5               22.5               23.1                23.0         27.0
                                             Floating rate                                                      61.4               57.1                51.8               37.8               38.9                29.0         36.0
                                            Exchange rate                                                       10.8                5.2                 2.7               1.3                1.3                 1.0           2.0
                                                Others                                                          1.8                 2.7                2.1                2.2                2.2                 2.0           4.0
                        ¹ Since these data have been calculated through the use of the commonly used international methodology, the statistics allow for comparisons with the indicators of other countries.


                         Federal Debt Indicators*
                         Federal Debt Indicators*
                                                                                                                                                                                                                        2007
                                                         Indicators                                            2003                2004               2005               2006              Jan-07
                                                                                                                                                                                                           M inim um      M axim um
                        Stock of DPF* held by the public (R$ billion)                                          965.8             1,013.9            1,157.1             1,237.0            1,228.4            1,370.0        1,450.0
ANNUAL BORROWING PLAN




                        Average m aturity - Federal O utstanding Debt (m onths)                                 39.0               35.3               32.9                35.5               36.3               37.0           42.0
                        % M aturing in 12 m onths                                                               30.7               39.3               38.2                32.4               33.4               27.0           31.0
                                             Share of DPF (%)
                                                Fixed rate                                                      9.5                16.1                23.6               31.9               31.1                33.0         39.0
                                               Price Index                                                      10.3               11.9                13.1               19.9               20.4                20.0         24.0
                                               Floating rate                                                    46.5               45.7                43.9               33.4               34.5                26.0         32.0
                                              Exchange rate                                                     32.4               24.2                17.6               12.7               12.1                10.0         12.0
                                                  Others                                                        1.4                 2.2                 1.8               2.0                2.0                 1.0           3.0
                        * It includes the external debt under the responsibility of National Treasury
                        ** Since these data have been calculated through the use of the com m only used international m ethodology, the statistics allow for com parisons w ith the in dicators of other countries.

                                                                                                                                                                                                                                       4
                           Ministry of Finance


                       A steady level of public external debt with improved profile
                       Impact of the “Cleaning Up” on the Federal Government External Debt
                       Impact of the “Cleaning Up” on the Federal Government External Debt


                                                                                                                                                   (US$ bn)

                                                                        Operations                                                   Face Value1

                                    External Public Debt in Bonds                                                                                   15.0
                                         C-Bond call (Oct-05)                                                                                         1.1
                                         Early Redemption Program2                                                                                    6.1
                                         Brady Bonds call (Apr-06)                                                                                    6.5
                                         Tender Offer (Jun-06)                                                                                        1.3

                                    Contractual Debt                                                                                                22.1
                                     IMF early payment I (Jul-05)                                                                                    4.9
                                         IMF early payment II (Dec-05)                                                                               15.5
                                         Paris Club early payment (Jan-063)
EXTERNAL PUBLIC DEBT




                                                                                                                                                      1.7

                                    Total                                                                                                           37.1
                                    1
                                        It captures the impact of the operations on the outstanding public debt
                                    2
                                        The program started in Jan/06. The value of US$ 6.1 bn refers to the bonds repurchased up to 12/31/06.
                                    3
                                        Announcement


                                                                                                                                                              5
                                          Ministry of Finance


                        National Treasury Performance – External Issuances follow qualitative criteria…
                         Reduction on External Debt’s Payment Flow
                         Reduction on External Debt’s Payment Flow                                                                                                                                                                                                                      Buyback program – Maturity profile
                                                                                                                                                                                                                                                                                        Buyback program – Maturity profile
                                      2,000
                                                                                                                                                                                                                                                                                                                            7.1
                                      1,800
                                                                                                                                                                       Principal                                     Interest
                                      1,600
                                      1,400                                                                                                                                                                                                                                                                                       5.2
                                                                                                                                                                                                                                                                                                                                                                4.7
                                      1,200                                                                                                                                                                                                                                                                                                      4.5
                        S n




                                                                                                                                                                                                                                                                                                                                                                                        4.3




                                                                                                                                                                                                                                                                                        USD bn
                       U $M




                                      1,000
                                                                                                                                                                                                                                                                                                                                                       3.1
                                         800                                                                                                                                                                                                                                                     2.9                                                                                          2.8        2.9
                                                                                                                                                                                                                                                                                                                                                                        2.7                                                        2.7 2.6
                                                                                                                                                                                                                                                                                                           2.5                                                                                                      2.5
                                         600
                                         400
                                         200
                                          -
                                                            2006
                                                                     2007
                                                                                2008
                                                                                          2009
                                                                                                     2010
                                                                                                                     2011
                                                                                                                                     2012
                                                                                                                                                 2013
                                                                                                                                                            2014
                                                                                                                                                                       2015
                                                                                                                                                                                 2016
                                                                                                                                                                                          2017
                                                                                                                                                                                                   2018
                                                                                                                                                                                                              2019
                                                                                                                                                                                                                        2020
                                                                                                                                                                                                                                   2021
                                                                                                                                                                                                                                               2022
                                                                                                                                                                                                                                                               2023
                                                                                                                                                                                                                                                                           2024
                                                                                                                                                                                                                                                                                                 2006                       2007                 2008                 2009              2010              2011                     2012
                                                                                                                                                                                                                                                                                                                                                   Original Flow              Flow after the buyback

                       Source: National Treasury                                                                                                                                                                                                                                       Source: National Treasury

                             External Debt – National Treasury
                             External Debt – National Treasury                                                                                                                                                                                                                          BRL Yields Evolution
                                                                                                                                                                                                                                                                                        BRL Yields Evolution
                                       R e s tru c tu re d D e b t (B ra d ie s )                                             N ew B onds                                        C o n tra c tu a l D e b t                               N e t R e s e rv e s
                                                                                                                                                                                                                                                                                       14.50%
                                      9 0 ,0 0 0                                                                                                                                                                                                                                                                                                                      14.29%
                                                                                                                                                                                                                                                                                                                 14.05%

                                      8 0 ,0 0 0
                                                                                                                                                                                                                                                                                       13.50%
                                      7 0 ,0 0 0
                                                                                                                                                                                                                                                                                                                                                                                         12.73%
EXTERNAL PUBLIC DEBT




                                      6 0 ,0 0 0                                                                                                                                                                                                                                       12.50%
                        US$ Million




                                      5 0 ,0 0 0

                                      4 0 ,0 0 0                                                                                                                                                                                                                                       11.50%

                                      3 0 ,0 0 0                                                                                                                                                                                                                                                                                                                                                                     10.64%
                                                                                                                                                                                                                                                                                                                                                                                                                                     10.25%
                                                                                                                                                                                                                                                                                       10.50%
                                      2 0 ,0 0 0

                                      1 0 ,0 0 0
                                                                                                                                                                                                                                                                                                                                                                                                                                       9.89%
                                                                                                                                                                                                                                                                                        9.50%
                                                                                                                                                                                                                                                                                                   et-05




                                                                                                                                                                                                                                                                                                                    o -05




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                                              0
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                                                                                                                                                                                                                                                                                                                                                                                                                                              a
                                                   Jan-00

                                                            May-00

                                                                     Sep-00

                                                                              Jan-01

                                                                                       May-01

                                                                                                 Sep-01

                                                                                                            Jan-02

                                                                                                                            May-02

                                                                                                                                        Sep-02

                                                                                                                                                   Jan-03

                                                                                                                                                              May-03

                                                                                                                                                                        Sep-03

                                                                                                                                                                                 Jan-04

                                                                                                                                                                                          May-04

                                                                                                                                                                                                   Sep-04

                                                                                                                                                                                                            Jan-05

                                                                                                                                                                                                                     May-05

                                                                                                                                                                                                                               Sep-05

                                                                                                                                                                                                                                          Jan-06

                                                                                                                                                                                                                                                      May-06

                                                                                                                                                                                                                                                                  Sep-06

                                                                                                                                                                                                                                                                              Jan-07




                                                                                                                                                                                                                                                                                                  s




                                                                                                                                                                                                                                                                                                                                                                                               s
                                                                                                                                                                                                                                                                                                                                   BRL 2016                           BRL 2022                          BRL 2028


                       Source: National Treasury                                                                                                                                                                                                                                       Source: Bloomberg                                                                                                                                              6
                                           Ministry of Finance


                                    National Treasury Performance -…and big opportunities merge in the domestic market
                                    NTN-F & Global BRL Outstanding and yields (as of Mar-07)
                                    NTN-F & Global BRL Outstanding and yields (as of Mar-07)

                                    40.0           12.13           38.4                                                                   12.30
                                                                                     12.06
                                                                                                                 12.07
                                    35.0
                                                                            12.01
                                                           11.94                                                                          11.80
                                    30.0

                                    25.0                                    24.1
                                                                                                                                          11.30




                                                                                                                                                  % p.y
                                    20.0
DOMESTIC AND EXTERNAL PUBLIC DEBT




                                                                                                                                          10.80
                                    15.0
                                                                                                 9.91               10.24         10.26
                                    10.0
                                                                                         6.8                                              10.30
                                     5.0            3.6                                          3.4       3.1           3.0      2.3

                                     0.0                                                                                                  9.80
                                               Jan-2008 Jan-2010 Jan-2012 Jan-2014 Jan-2016 Jan-2017 Jan-2022 Jan-2028
                                                                     Outstanding R$ bn         NTN-F's Yield        BRL's Yield
                                    Source: National Treasury                                                                                             7
                              Ministry of Finance


                       National Treasury Performance -…and big opportunities merge in the domestic market
                       NTN-B Outstanding and yields (as of Mar-07)
                       NTN-B Outstanding and yields (as of Mar-07)

                         50.0                                                                                                   8.0
                                          45.0
                         45.0                       7.93
                                                                                                                                7.9
                         40.0                              37.3
                                                                                                                                7.8
                         35.0                                 7.75
                                                                          7.73
                                                                                                                                7.7
                         30.0
                                                                        23.2




                                                                                                                                      % p.y.
                         25.0                                                          7.56                                     7.6
                                                                                20.9
                         20.0
                                                                                                                                7.5
                         15.0                                                                    7.39                  13.9
                                                                                                                                7.4
                         10.0                                                                   8.4           7.31
DOMESTIC PUBLIC DEBT




                                                                                                              3.9    7.23       7.3
                           5.0

                           0.0                                                                                                  7.2
                                      May 2009        Aug 2010       May 2011    May 2015     Aug 2024   May 2035    May 2045

                                                              Outstanding R$ bn                       Yield
                       Source: National Treasury                                                                                               8
                              Ministry of Finance


                        Performance in Domestic Market – Liquidity Indicators
                        Daily Turnover* – Fixed Rate Bonds (USD bn)
                        Daily Turnover* – Fixed Rate Bonds (USD bn)                                           Daily Turnover* – Inflation linked (USD bn)
                                                                                                              Daily Turnover* – Inflation linked (USD bn)
                               4,502.3                                                                                 71 8.0




                                                                                                                                              3 52 .4




                                                      984.8

                                                                      455.1                                                                                       6 9.4
                                                                                         280.5                                                                                       37 .5


                         F ixed R ate (T otal)     LT N (Jul-07)   LT N (Jan-08)     N T N F (2010)               N T N B (T ota l)       N T N B (2 01 0)   N T N B (2 01 5)   N T N B (20 4 5)


                       Source: National Treasury   *as of jan-07                                              Source: National Treasury    *as of jan-07



                                                                                    Yield X Bid-Ask Spread
                                                                                                      Jan 17, 2007

                                                                                   NTN-B 2010                NTN-B 2015                        NTN-B 2045
DOMESTIC PUBLIC DEBT




                                                    Yield (BD/252)                   7.99%                     7.88%                             7.45%
                                                    Spread (bps)                        1                         3                                12

                                                                                   LTN Jul/07                 LTN Jan/08                       NTN-F 2010
                                                    Yield (BD/252)                  12.64%                      12.49%                           12.55%
                                                    Spread (bps)                       1                           1                                2
                                                                                                                                                                                                   9
                                             Ministry of Finance


                                           Market Measures – Electronic Platforms

                                            SISBEX – Creation of the BM&F

                                              A robust and sophisticated trading system owned and managed by BM&F, the Brazilian Futures and
                                              Commodities Exchange.

                                              From risk and settlement perspectives, it is important to reinforce that all transactions registered
                                              at SISBEX are settled through the clearing house also managed by BM&F, following the concept of
IMPROVEMENT IN DEBT MANAGEMENT PRACTICES




                                              Central Counterparty, which mitigates the risk to the final investor.




                                            CETIPNET - Creation of the CETIP Negotiation Platform – allows for carrying out several operations
                                            on-line, including the negotiation of fixed-income bonds (public and private) and a modality of term
                                            operations in auctions of National Treasury Bonds.




                                                                                                                                                 10
                         Ministry of Finance


                      Market Measures – Asset Clearing Promotion
                      These measures are taken with the aim of:

                           Facilitate the participation of foreign investors in the Brazilian domestic debt through measures that will
                          bring more transparency and liquidity to the market, thus expanding and diversifying the investors base;
                           Stimulate the participation of institutional investors, such as Pension Funds, in the bonds negotiations in
                          the secondary market;
                           Stimulate the bonds negotiation by the dealers through the electronic platform.

                      Bloomberg and BM&F Sisbex Screen
                      Bloomberg and BM&F Sisbex Screen                           Reuters and BM&F Sisbex Screen
                                                                                 Reuters and BM&F Sisbex Screen
PRACTICES
M ANAGEMENT
IMPROVEMENT IN DEBT




                          8 dealers available and 3 other soon                                  Soon, link with Sisbex

                                                                                                                                    11
                            Ministry of Finance



                      Market Measures - More transparency and liquidity for Federal Public Bonds
                      COMPARE - Online System of Federal Public Bonds Quotation
                      COMPARE - Online System of Federal Public Bonds Quotation




                          The ANDIMA (Brazilian National Association of Financial Market Institutions) launched it
                      in June-06. COMPARE is a system that allows investors to check indicative price
                      information1 of transactions with bonds registered in the SELIC (clearing and settlement
PRACTICES




                      public debt bonds house) in the secondary market;
                          Dealers: Soon on, the dealers who use the screen trading will benefit from better scoring
M ANAGEMENT




                      in the ranking system.
                          More transparency stimulates a bigger liquidity in this market, bringing foreign and
                      domestic investors to the market.
IMPROVEMENT IN DEBT




                      1 This is a reference price, not the actual closing prices for each deal
                                                                                                                      12
                          Ministry of Finance


                      Market Measures – Facilitating foreign investment
                      Integration and streamlining of registration procedures
                      Integration and streamlining of registration procedures

                          Decreasing Bureaucracy:
                              The Ministry of Finance and CVM (Brazilian Security Exchange Commission) have worked to open
                              the Brazilian markets for many years.
                              Res. 2689/CVM, from 2000, eliminated most distinctions between institutional and other non-
                              resident investors.
PRACTICES




                              Processing time at CVM was reduced from up to 30 days to 24 hours.
                              National Revenue Service and CVM are working to streamline CNPJ (corporate register)
                              procedures.
M ANAGEMENT




                              Investors still rely on a custodian bank, which will also be the responsible for paying all due
                              taxes.
                          Cutting Taxes – exempting foreigners from withholding taxes
IMPROVEMENT IN DEBT




                              Since Feb-06.
                          Improving Liquidity and Transparency
                              Screen Trading and the COMPARE system.



                                                                                                                                13
                                  Ministry of Finance


                        THE NEW FRONTIER: increasing foreign access to the fixed income market
                                                                                                                                                                                                                                                                                                                               Foreigner´s Investors: Distribution among Fixed Income
                                                                                                                                                                                                                                                                                                                               Foreigner´s Investors: Distribution among Fixed Income
                        Foreigner´s Investors: Portfolio level (US$ bn)
                        Foreigner´s Investors: Portfolio level (US$ bn)                                                                                                                                                                                                                                                        instruments (R$ bn)
                                                                                                                                                                                                                                                                                                                               instruments (R$ bn)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           9.1
                               90.0                                                                                                                                                                                                                                                                         85.20                      40                                                                                                                                                                                                         8.8
                                                                      Fixed Incom e                                                Equities
                               80.0
                                                                                                                                                                                                                                                                       76.87
                                                                                                                                                                                                                                                                                                                                       36                                                O thers
                                                                                                                                                                                                                                                                    72.3                                                                                                                                                                                                                                                                 5.5
                                                                                                                                                                                               67.1                                                                                                                                                                                                                                                                                                                             5.4
                               70.0                                                                                                                           64.6                                                                                                                                                                     32                                                M utual F unds (F IF )
                                                                                                                                                                                                                       62.2 64.7                                                                                                                                                                                                                                                                                       4.9
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              4.5
                               60.0                                                                                                                                                                                                                    65.5
                                                                                                                                                                                                                                                                                                                                       28                                                N ational T reasury B onds                                                       0.6
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   3.3 2.7
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     3.1
                                                                                                                                                                                                                               64.0
                                                                                                                                                                                                                                                                                                                                       24




                                                                                                                                                                                                                                                                                                                               R$ Bn
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           15 .4
                      US$ Bn




                               50.0                                                                                                                                                                                                                                                                                                                                                                                                                              0.6                                                                              1 5.5

                                                                                                                                                                                                                                                                                                                                       20                                                                                                                                 11 .1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         1 3.9
                               40.0                                                                                                               48.6                                                                                                                                                                                                                                                                                                                                                                 13.1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                14 .1

                                           25.6                                                                                                                                                                                                                                                                                        16                                                                                                                        10 .5             14.0 15.1 1 2.5 1 3.5
                               30.0
                                                                                                                                                                                                                                                                                                           18.17                       12
                               20.0                                                                                                                                                                               11.9 11.8        14.3
                                                                                                                                                                                          12.1                              12.5                                                                                                        8                                                                                                                                 13.6                             13.214.1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   16.0
                                                                                                                                                    3.7 5.9                                                                                                                                                                                                                                                                                                                                        10.811.4
PRACTICES




                               10.0                                                                                                                                                                                            13.6                                                                                                                                                                                                                              9.7               8.3 7.9 9.5 9.1
                                            2.6                                                                                                                                                                                                                                                                                         4
                                0.0                                                                                                                                                                                                                                                                                                     0
                                           Jan-05
                                                    Feb-05
                                                             Mar-05
                                                                      Apr-05
                                                                               May-05
                                                                                        Jun-05
                                                                                                 Jul-05
                                                                                                           Aug-05
                                                                                                                     Sep-05
                                                                                                                               Oct-05
                                                                                                                                         Nov-05
                                                                                                                                                     Dec-05
                                                                                                                                                                Jan-06
                                                                                                                                                                           Feb-06
                                                                                                                                                                                      Mar-06
                                                                                                                                                                                                  Apr-06
                                                                                                                                                                                                              May-06
                                                                                                                                                                                                                          Jun-06
                                                                                                                                                                                                                                      Jul-06
                                                                                                                                                                                                                                                   Aug-06
                                                                                                                                                                                                                                                                Sep-06
                                                                                                                                                                                                                                                                             Oct-06
                                                                                                                                                                                                                                                                                          Nov-06
                                                                                                                                                                                                                                                                                                        Dec-06
                                                                                                                                                                                                                                                                                                                      Jan-07




                                                                                                                                                                                                                                                                                                                                            Feb-05
                                                                                                                                                                                                                                                                                                                                                     Mar-05
                                                                                                                                                                                                                                                                                                                                                              Apr-05
                                                                                                                                                                                                                                                                                                                                                                       May-05
                                                                                                                                                                                                                                                                                                                                                                                Jun-05
                                                                                                                                                                                                                                                                                                                                                                                         Jul-05
                                                                                                                                                                                                                                                                                                                                                                                                  Aug-05
                                                                                                                                                                                                                                                                                                                                                                                                           Sep-05
                                                                                                                                                                                                                                                                                                                                                                                                                    Oct-05
                                                                                                                                                                                                                                                                                                                                                                                                                             Nov-05
                                                                                                                                                                                                                                                                                                                                                                                                                                      Dec-05
                                                                                                                                                                                                                                                                                                                                                                                                                                               Jan-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                        Feb-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Mar-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Apr-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   May-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Jun-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Jul-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Aug-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Sep-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Oct-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Nov-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Dec-06
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Jan-07
                      Source: CVM                                                                                                                                                                                                                                                                                              Source: CVM
M ANAGEMENT




                       Foreigner's Investors: Domestic Debt Participation
                       Foreigner's Investors: Domestic Debt Participation
                      3 .0 %                                                                                                                                                                                                                                                                        2 .8 2 %


                      2 .5 %
                                                                                                                                                                                                                                                                                                                                       Considering both the public bonds and the mutual
                                                                                                                                                                                                                            2 .1 2 %                                                                                                   funds, little variation has been observed from the
IMPROVEMENT IN DEBT




                      2 .0 %
                                                                                                                                                                                                                                                                                                                                       turbulence in May-06.
                      1 .5 %


                      1 .0 %


                      0 .5 %      0 .6 9 %


                      0 .0 %
                                  Jan-05
                                           Feb-05

                                                    Mar-05

                                                             Apr-05

                                                                      May-05
                                                                               Jun-05

                                                                                        Jul-05

                                                                                                  Aug-05

                                                                                                            Sep-05
                                                                                                                      Oct-05

                                                                                                                                Nov-05
                                                                                                                                           Dec-05

                                                                                                                                                       Jan-06
                                                                                                                                                                  Feb-06

                                                                                                                                                                             Mar-06
                                                                                                                                                                                         Apr-06

                                                                                                                                                                                                     May-06

                                                                                                                                                                                                                 Jun-06

                                                                                                                                                                                                                             Jul-06
                                                                                                                                                                                                                                          Aug-06

                                                                                                                                                                                                                                                       Sep-06

                                                                                                                                                                                                                                                                    Oct-06
                                                                                                                                                                                                                                                                                 Nov-06

                                                                                                                                                                                                                                                                                               Dec-06

                                                                                                                                                                                                                                                                                                             Jan-07




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    14
                             Ministry of Finance


                      THE NEW FRONTIER: increasing foreign access to the fixed income market
                      Domestic Public Debt Profile
                      Domestic Public Debt Profile

                         450.0
                                                                                                  0.5%
                         400.0
                                                           2.0%
                         350.0

                         300.0
PRACTICES




                         250.0
                                                                                9.3%
M ANAGEMENT




                         200.0

                         150.0

                         100.0
IMPROVEMENT IN DEBT




                           50.0

                             0.0
                                              Fixed rate          Inflation linked     Selic Linked         FX-linked    Others
                                                                  Domestic Investors           Non Resident Investors*
                      * Estimated
                      Source: National Treasury                                                                                   15
                             Ministry of Finance


                      THE NEW FRONTIER: increasing foreign access to the fixed income market
                      Maturity Distribution of Inflation Linked Bonds
                      Maturity Distribution of Inflation Linked Bonds

                        80.0


                        70.0
                                                                                                                                  15.3%

                        60.0
PRACTICES




                        50.0
                                                                                   10.5%

                        40.0
                                                                                                   11.6%
M ANAGEMENT




                        30.0
                                                                                                                   2.5%
                        20.0
IMPROVEMENT IN DEBT




                        10.0


                          0.0
                                          < 1 year   1 < years < 2      2 < years < 3   3 < years < 4   4 < years < 5     > 5 years
                                                       Domestic Investors                       Non Resident Investors*
                      * Estimated
                      Source: National Treasury                                                                                           16
                                    Ministry of Finance




                                                                      For additional information access
                                                                      Brazilian National Treasury site:

                                                                          www.tesouro.fazenda.gov.br


                                                                 Or contact Institutional Relations area:
BRAZILIAN FEDERAL PUBLICDEBT




                                                                             brazildebt@fazenda.gov.br

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