Prices and yields of Brazilian government bonds September 2012

Prices and yields September 2012

The table below show the prices and yields of Brazilian government bonds as of September 6, 2012 from treasury direct (Tesouro Direito). At first glance, information about prices and rates of government bonds seem tricky. Prices range between $ 754.63 and R $ 5399.06 and yields ranging from -0.02% to 9.68%.

Vencimento indicates the maturity date and is the date when the money invested plus yields will be returned.

Taxa compra e venda is the yield for purchases and sales till maturity for the bond in question. However there is a wide disparity between the yields of the various securities. The difference is explained by the index the bonds are linked to. The yields for fixed interest rate securities (Prefixados) already represent the final values and thus are higher. The yields for bonds indexed to the IPCA are still to be added to the annual inflation index. The expectation for 2012 IPCA is 3.08%, down from above 5% in 2011. The yield of securities indexed to the Selic rate is usually 0.00%, as the profitability of these securities corresponds to the variation in the Selic rate. The estimate of the Selic for 2012 is 7.5%, down from 12.5% last year.

Preço Unitário Dia indicates how much it costs for each title on a given day. Importantly, there is no relationship between price and quality of the title. The most expensive titles are no better or worse than the cheaper titles.

The important thing to know is that the minimum amount for purchase of any title is the title fraction of 0.2, ie 20% of the value of a security. The bonds are offered in Treasury Direct title in fractions of 0.2, ie, the investor can buy title 0.2, 0.4 title, 0.6 title, 0.8 title, 1.2 and so title on. However, it is not possible to buy, for example, 0.1 or 5.7 heading titles.

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