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Bonds investors bet Brazil is less at risk of contagion from the Greek debt crisis than Eastern European nations.

Prime Minister Gordon Brown with President of Brazil Luiz Ignacio Lula da Silva and President of Mexico Felipe Calderon Hinojosa - Picture Richard Lewis/Newsteam.co.uk

Brazil’s benchmark borrowing costs slid below  Russia´s for the first time this year as investors bet the South American country is less at risk of contagion from the Greek debt crisis than Eastern European nations.

Brazilian dollar bonds yielded 2.18 percentage points more than U.S. Treasuries yesterday, compared with 2.19 percentage points for Russia, according to JPMorgan Chase & Co.’s EMBI+ index. Brazilian yields last were below those on Russian debt, which is rated one level higher by Standard & Poor’s and two by Moody’s Investors Service, on Dec. 21.

“Brazil offers a safe haven for investors that are concerned about market volatility and contagion related to Greece,” said David Bessev , who helps manage more than $10 billion of emerging-market debt at Prudential Financial in Newark, New Jersey. “It’s not obvious to me that the distortion couldn’t last for a long time given what’s going on in Eastern Europe.”

Investors view Brazilian debt as safer than Russian bonds after S&P’s rating cuts of Greece, Portugal and Spain last week threatened to crimp growth in Europe. Russia’s gross domestic product will expand 4 percent this year, the Economy Ministry forecasts. Growth in Latin America’s biggest economy, by contrast, will surge to 6.1 percent this year, according to a central bank survey of analysts published this week. READ MORE HERE

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