WASHINGTON -- Citicorp vice chairman William Rhodes said Brazil needs a special U.S. Treasury issue of zero coupon bonds to back its debt accord because not enough bonds are available otherwise.
Zero coupon bonds are "a scarcity item in the market these days so you would need a special issue," Mr. Rhodes told a news conference during the International Monetary Fund/World Bank annual meetings here.
He noted that since Argentina bought some of its zero coupons in the open market to underpin its debt accord early this year, the supply of bond had shrunk.
Speculation Spurs Gain
In Brazil's case "you don't have the volume in the market" to buy the bonds, Mr. Rhodes said.
Wall Street traders said U.S. 30-year Treasury bonds gained ground Monday on speculation Brazil would be forced to buy bonds -- collateral for its $#5 billion Brady-style debt restructuring pact -- in the open market if it is unable to reach a stand-by pact with the IMF.