BRAZIL DEBT SETTLEMENT
One by one Britain's defaulting foreign debtors are coming to terms in the matter of debt service resumption. There is every reason why they should in view of their improving trade balances in the new conditions created by war. Brazil is the latest debtor to toe the line after some lengthy and arduous negotiations. Frankly, the offer is not particularly generous, but it is the best that could be got, and the Council of Foreign Bondholders is doubtless justi- fied in recommending it for acceptance. For a period of four years running from April I, 1940, to March 31, 1944, Brazil offers the following percentages of the rates paid in the final year of the Aranha Plan jettisoned by the Brazilian Government in November, 1937: 1. Interest on Grades I, 2 and 3 to be so per cent. throughout. Sinking funds to be 4o per cent. on Grades i and 2.
2. Interest on Grades 4 to 7 to be 40 per cent. for the first year, 41 per cent. in the second year, 43 per cent. in the third year, and 5o per cent. in the fourth year.
In relation to the original contractual rates the interest now to be paid varies between 5o per cent. in Grades r and 2 to a mere 13 per cent. in Grade 7, an eloquent commentary on the losses suffered by bondholders who lent money to Brazil in the "good old days." One can only hope that as Brazil's trade position gets stronger, as it should in war conditions, the debtor may see fit to honour its obligations more generously by stepping up its offer. On the present basis Brazil bonds, which have risen sharply in recent weeks, seem adequately valued in the market. CUSTOS.
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