832.51/1745: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
57. In regard to repurchase of bonds by the Brazilian Government, as discussed in your 71, February 24, 1 p.m. and Department’s 44, [Page 596] February 28, 6 p.m., the Department believes it essential that the Brazilian Government set forth fully in any debt offer what they propose to do so that the bondholders may have full knowledge.
Your 90, March 6, 3 p.m. Department would not want to make a particular issue of the prospective treatment to be offered to bondholders of Grade IV if the Brazilian Government feels itself faced by serious exigencies in the matter. Its leading wish has been and remains to secure an improvement in the comparative terms offered to the bonds in Grade III with reference to Grades I and II. It therefore still retains the hope that the Brazilian Government, in working out the terms of the offer, can find a way to do something in that regard. As already several times expressed to you, it is the Department’s sense that such action would be not only equitable but would produce beneficial results, from the Brazilian point of view, in greatly increasing the chances that the offer would receive a favorable reception among the bondholders.