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Finance, Rules And The Indexation Of Brazilian Government Bonds, Mark J. Roe

Vanderbilt Journal of Transnational Law

In roughly a dozen years, Brazil has created a sophisticated multi-billion dollar system of public debt in the midst of an unpredictable inflationary financial climate. During this time the government bonds were initially all indexed against inflation; the obligations were automatically periodically adjusted in accordance with price index changes. However, as shall be seen, the indexation of the bonds was not necessarily the cause of the expansion of the market for public debt.

The legal-economic mechanism of Brazilian indexation is not widely understood in the United States. The method used to calculate the index that provides the basis for readjusting …