BRASILIA – Brazil’s federal public debt increased 2.03% in February from the month before to 5.73 trillion reais ($1.21 trillion), the Treasury said on Wednesday, while issuance costs kept rising amid high inflation and interest rates.
The total domestic debt stock climbed 2.3% in the period to 5.49 trillion reais, according to the Treasury.
The average interest rate on the domestic federal debt increased to 9.5% in January from 8.9% in January, while the average rate on the new domestic debt issued in the 12 months to February rose to 9.25% from 8.92%.
The Treasury said in a statement that average issuance rates started the month at a lower level, but rose again from the second week onwards, in a period marked by inflationary pressures amid Russia’s invasion of Ukraine.
Risk aversion continued through March, but the Treasury highlighted a recent easing in the yield curve, helped by the stronger currency performance and the central bank’s signals that it should end its aggressive monetary tightening cycle to tame inflation.
Brazil’s benchmark interest rate has already risen to 11.75% from its record low of 2% last March and the central bank’s chief Roberto Campos Neto indicated that a final 100-basis-point hike should wrap up the cycle in May.
“From the point of view of debt management, we observe the resilience of the Brazilian market. Interest rates, exchange rates, CDS had a very good reaction despite the conflict that occurs (in Eastern Europe),” said deputy general coordinator of Public Debt Operations Roberto Lobarinhas.
($1 = 4.7508 reais)
(Reporting by Marcela Ayres; editing by Chizu Nomiyama and Jonathan Oatis)
