How is liquidity in general in the Brazilian sovereign fixed income market?
Posch: The Brazilian fixed income market is relatively large and liquid for an EM country. In November, for example, one of the most recent months for which data are available, there was just under 7 billion Brazilian real (BRL), or 3.8 billion US dollars, in turnover per day for fixed rate bonds. That trading was largely concentrated in the short end of the curve. In the same month, another 1.4 billion real per day traded in inflation-linked bonds, according to the Brazilian Treasury. Brazil provides additional liquidity through regular buyback and debt swap auctions and is improving access for individual investors through the Tesouro Direto programme (which allows residents in Brazil to buy government bonds through the internet). Q: What is PIMCO’s view on local Brazilian corporate bonds? Posch: The market for locally issued corporate debt in Brazil remains underdeveloped. To a large extent, this is simply because interest rates in Brazil are still high, making it very expensive for
