Brazil Offers 40 Year Callable Bond in Exchange for Bradys.

Business Editors

NEW YORK--(BUSINESS WIRE)--Aug. 4, 2000

The Federative Republic of Brazil ("Brazil") announced today an invitation (the "Invitation") to holders of certain of Brazil's outstanding bonds (the "Old Bonds") to exchange Old Bonds for a new issue of Brazil's U.S. dollar-denominated unsecured Global Bonds due 2040 (the "Global Bonds").

In addition, up to U.S. $500,000,000 in aggregate principal amount of Global Bonds are being offered to prospective investors for cash (the "Cash Offering" and, together with the Invitation, the "Global Bond Offering"). Brazil intends to issue a minimum of U.S. $1,000,000,000 in aggregate principal amount of Global Bonds pursuant to the Global Bond Offering. The Global Bonds are redeemable at par plus accrued interest at Brazil's option, in whole or in part, at any time upon 15 days' prior notice to holders (in the case of a redemption in whole) or upon 30 days' prior notice to holders (in the case of a redemption in part), on or after August 17, 2015, and in an aggregate principal amount not less than U.S. $100,000,000.

The Old Bonds that may be offered in exchange for Global Bonds pursuant to the Invitation are as follows: USD Par Series Z-L Bonds Due 2024 ("Par Bonds"), USD Discount Series Z-L Bonds Due 2024 ("Discount Bonds"), USD Front-Loaded Interest Reduction with Capitalization Series L Bonds Due 2014 ("C Bonds"), USD Debt Conversion Series L Bonds Due 2012 ("DCBs"), Front Loaded Interest Reduction Series L Bonds due 2009 ("FLIRBs"), USD New Money Bonds Series L due 2009 ("New Money Bonds"), EI Series L Bonds due 2006 ("EI Bonds") and Brazil Investment Bonds 2013 due ("Exit Bonds") (collectively, the "Old Bonds"). There are approximately U.S.$30.5 billion in aggregate principal amount of Old Bonds outstanding.

A holder whose Old Bonds are accepted by Brazil in exchange for Global Bonds will receive a principal amount of Global Bonds equal to the product of the applicable Exchange Ratio times the original principal amount of Old Bonds accepted for exchange, rounded down to the nearest U.S.$1,000. In addition, such holder will receive a payment in cash equal to the accrued but unpaid interest on the Old Bonds accepted for Exchange to, but not including, the Settlement Date and a payment in cash with respect to rounded amounts. The "Exchange Ratio" is equal to (a) the relevant Old Bond Exchange Price, times (b) the applicable scaling factor, divided by (c) the Global Bond Issue Price. The scaling factor is set forth in a prospectus supplement dated August 4, 2000 (the "Prospectus Supplement"), relating to the Global Bond Offering.

For the purposes of determining the principal amount of Global Bonds that a holder of Old Bonds will receive in exchange for any Old Bonds accepted by Brazil pursuant to the Invitation, the "Old Bond Exchange Price" for each series of Old Bonds will be a price intended to result in a yield to maturity on the Settlement Date equal to the sum of (a) the UST Benchmark Rate (i.e., the yield to maturity for the U.S. Treasury 6.125% Bond due August 15, 2029), plus (b) the Benchmark Spread (i.e., the spread over the UST Benchmark Rate of Brazil's 10.125% Bond due May 15, 2027), plus (c) the Old Bond Spread for that series of Old Bonds. Brazil will determine and announce the UST Benchmark Rate, the Benchmark Spread and the Old Bond Exchange Prices at or around 8:00 A.M., New York City time, on the day the Invitation Period expires. The "Old Bond Spread" for each series of Old Bonds is set forth in the Prospectus Supplement.

The "Global Bond Issue Price" will be a price per U.S. $1,000 principal amount between U.S. $800 and U.S. $850 that results in a yield to maturity on the Settlement Date equal to the sum of (a) the UST Benchmark Rate, plus (b) the Clearing Spread, which will not be lower than the Benchmark Spread and will be selected by Brazil in its sole discretion pursuant to an electronic modified Dutch auction. Brazil will determine and announce the Global Bond Issue Price at or around 9:00 A.M., New York City time, on the first business day after the end of the Submission Period. The "Submission Period" commences at or around 8:00 A.M., New York City time, and will end at 3:00 P.M., New York City time, on August 9, 2000.

A holder of Old Bonds desiring to submit an offer to exchange Old Bonds for Global Bonds must submit, or arrange to have submitted, a duly completed letter of transmittal electronically via the website at https://www.gs.com/fi/eexchange/exch_start.gscgi/10301 (the "Invitation Website"), during the Submission Period. No offers to exchange Old Bonds for Global Bonds may be submitted or withdrawn after the Submission Period expires. The electronic letter of transmittal may consist of a competitive offer, specifying a minimum spread that the holder would be willing to accept as the Clearing Spread, or a non-competitive offer, without specifying any such minimum spread. The Invitation Website is accessible only by password, which a holder of Old Bonds may obtain by contacting Goldman, Sachs & Co., the global e-coordinator, at the telephone number listed below in this press release.

Results of the Invitation, including the Global Bond Issue Price, will be announced at or around 9:00 a.m., New York City time, or as soon as possible thereafter, on August 10, 2000, and settlement of the Global Bonds will occur five trading days later on August 17, 2000 (the "Settlement Date").

If Brazil decides to sell any Global Bonds sold pursuant to the Cash Offering, Brazil and the joint lead managers will determine by negotiation the aggregate principal amount of Global Bonds to be sold for cash, which amount will not exceed U.S.$500,000,000. The Global Bonds sold for cash will be priced the same as the Global Bonds issued in the Invitation, and will be fully fungible with those Global Bonds.

Further information regarding the Global Bond Offering and the procedures for submitting exchange offers pursuant to the Invitation is provided in the Prospectus Supplement. Copies of the Prospectus Supplement may be obtained from Citibank, N.A., the settlement agent, at telephone [phone], or from any joint lead manager at one of the telephone numbers listed below.

Chase Securities Inc., 270 Park Avenue, New York, New York 10017, telephone [phone] (inside the U.S.) or 1-212-834-4070 (outside the US, call collect); Goldman, Sachs & Co., the global e-coordinator, 85 Broad Street, New York, New York 10004, telephone [phone] (inside the U.S.) or 1-212-902-9353; and Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036, telephone [phone] (inside the U.S.) or 1-212-761-1652 (outside the US, call collect) are acting as joint lead managers for the Invitation and joint bookrunners for the Cash Offering.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities referenced in this communication in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

The distribution of materials relating to the Global Bond Offering, and the transactions contemplated by the Global Bond Offering, may be restricted by law in certain jurisdictions. If materials relating to the Global Bond Offering come into your possession, you are required by Brazil to inform yourself of and to observe all of these restrictions. The materials relating to the Global Bond Offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the Global Bond Offering be made by a licensed broker or dealer and any joint lead manager or any affiliate of any joint lead manager is a licensed broker or dealer in that jurisdiction, the Global Bond Offering shall be deemed to be made by such joint lead manager or such affiliate on behalf of Brazil in that jurisdiction.

NETHERLANDS: This offer is only extended to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or trade.