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Emerging Markets • 16.12.2009

                           Switch from 2016 to shorter-term bond
                           We recommend investors to switch out               The yield to maturity of the 12.5% Brazil 2016
                           of 12.5% Brazil 2016 and into either               is currently about 8.81%. With a central-bank
                           8.75% IBRD 2012 or 11.25% EIB 2013.                rate of 8.75% and expectations of a hike from
                                                                              the second quarter, we find the potential for
                           First of all, we would like to emphasise that      further yield falls limited. As we see it,
                           we maintain our BUY recommendation for             investors will therefore benefit from holding a
                           real-denominated bonds. Although                   shorter-term bond. We find the following two
                           disappointing GDP data were announced on           alternatives attractive (they are also exempt
                           10 December, we still believe that Brazil will     from the 2% tax):
                           be in a strong economic position and the
                           political risk in the country is low, which will   8.75% IBRD June 2012 (AAA).
                           support the currency in the years to come.         Price: 99.40. Yield to maturity: 9.02%

                           Furthermore, Brazilian bonds pay an attractive     11.25% EIB February 2013 (AAA).
                           interest, considering the fact that the country    Price: 104.8. Yield to maturity: 9.40%
                           enjoys an investment-grade rating with the
                           three large credit-rating agencies. Brazil’s       For more details about the 11.25% EIB 2013
                           credit rating is expected to improve in coming     bond, see here.
Jyske Markets                                                                 In the event of a switch:
                           The key interest rate is now 8.75%. We assess
Vestergade 8 -16
DK - 8600 Silkeborg
                           that the Brazilian central bank will raise         12.50% Brazil January 2016 (BBB-).
                           interest rates in 2010. We expect hikes from       Price: 117.00. Yield to maturity: 8.81%
Analyst:                   the second quarter. We expect hikes of approx.
Kent Bæk Iversen           2.00 percentage points next year, while
                                                                               Comparison of the yield to maturity
+45 89 89 76 63            market prices discount hikes of approx. 3.00
KENT_IVERSEN@jyskeba       percentage points.                                  on our three real-denominated
nk.dk                                                                          bonds
                           If we prove right with respect to the central-
Translation:               bank rate, market rates are likely to decline a      11
Translation Services                                                           10.5
                           bit more. However, we find that the potential
Read more research
                           of the bond we preferred so far – 12.5% Brazil       9.5
reports on emerging-       2016 (B00687) - is exhausted. It has                   9
market bonds at            outperformed lately, since it is exempt from         8.5
www.jyskemarkets.com       the new 2% tax and was the only alternative            8
                                                                                August 2009   September       October 2009 November 2009
                           for foreign investors.                                               2009

                                                                                          12.5% Brazil 2016       8.75 % IBRD 2012
                                                                                          11.25% EIB 2013

Please see the last page
Emerging Markets • 16.12.2009 • Jyske Markets

                       Disclaimer & Disclosure
                        Jyske Bank is supervised by the Danish Financial Supervisory Authority.

                        The research report is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility
                        for the correctness of the material nor any liability for transactions made on the basis of the information or the estimates of
                        the report. The estimates and recommendations of the research report may be changed without notice. The report is for the
                        personal use of Jyske Bank's customers and may not be copied.

                        This is a recommendation and not an in-depth investment report.

                        Conflicts of interest
                        Jyske Bank has prepared procedures to prevent conflicts of interest. These procedures have been incorporated in the business
                        procedures covering the research activities of Jyske Markets, a business unit of Jyske Bank.

                        Jyske Bank's emerging-market analysts may not hold positions in the instruments for which they independently prepare
                        research reports. Jyske Bank may, however, hold positions, have interests in or business relations with the instruments that
                        are analysed. The analysts receive no payment from persons interested in individual research reports.

                        Read more about Jyske bank's policy on conflicts of interest at www.jyskebank.dk/terms.

                        Risk associated with the bond
                        Investment in an emerging-market bond involves risk. Many factors, including the country’s credit quality, willingness to pay,
                        liquidity, social conditions and economic development may affect the price of the bond. Indirect factors may also affect the
                        price of the bond, for instance global economic factors, global risk tolerance and geopolitical risks. See the research report for
                        our view on the risk. The risk factors stated in the report should not be regarded as exhaustive.

                        FX risk
                        If the bond is traded in a currency other than the investor’s base currency (this is often the case), the investor accepts an FX
                        risk. The FX risk is in many cases affected by the same factors as the bond (see above). We will assess the FX risk where we find
                        it necessary. The FX risk factors stated in the research report should not be regarded as exhaustive.

                        Update of regular research reports
                        We update EM Daily every day. We update EM Outlook every week. We update EM Recommendations at least once a week.
                        Our view of the individual countries will be updated on a regular basis in these publications. See the front page of the research
                        report for the date of the latest update.

                        Update of separate research reports

                        Separate reports are not updated. A new research report will be published when we find it necessary. This will often be the
                        case when there are significant changes which are relevant for investors. This includes changes in the recommendation, a
                        significant change of the risk associated with the bond or a significant change in FX risk. See the front page of the report for
                        the date when the research report was published. Separate recommendations are only published once.


                        Trading prices
                        All prices stated are the latest trading prices at the time of the release of the research report, unless otherwise stated.


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