Public Debt falls 0.31% in May, but remains above BRL 6 trillion

Despite the drop, the indicator remains above BRL 6 trillion, whose barrier was overcome for the first time in history in April. The Treasury forecasts that the FPD will rise in the coming months. According to the Annual Financing Plan (PAF), presented at the end of Januarythe FPD stock should end 2023 between R$ 6.4 trillion and R$ 6.8 trillion.

The Domestic Securities Public Debt (in securities) (DPMFi) fell by 0.4%, changing from R$5.79 trillion in April to R$5.767 trillion in May. Last month, the Treasury redeemed R$74.68 billion more in bonds than it issued, mainly in bonds linked to inflation. The only reason why the domestic debt did not fall further was the appropriation of R$ 51.46 billion in interest.

Through the appropriation of interest, the government recognizes, month by month, the correction of interest on securities and incorporates the value into the stock of public debt. With the Selic rate (basic interest rate of the economy) at 13.75% per year, the appropriation of interest puts pressure on government debt.

Last month, the Treasury issued BRL 139.775 billion in DPMFi bonds. With the high volume of maturities in May, redemptions totaled R$ 214.458 billion.

On the foreign market, the dollar’s rise in May increased the government’s indebtedness. The External Federal Public Debt (DPFe) increased by 1.8%, changing from R$ 242.42 billion in April to R$ 246.78 billion in May. The main factor was the 1.9% fall of the US currency last month.

Mattress

After rising in April, the public debt cushion (financial reserve used in times of turbulence or a strong concentration of maturities) fell again in May. This reserve went from R$1.053 trillion in April to R$983 billion last month. The main reason, according to the National Treasury, was the high concentration of maturities in May.

Currently, the mattress covers 8.06 months of public debt maturities. In the next 12 months, the maturity of R$ 1.205 trillion in federal securities is expected.

Composition

The high volume of maturities changed the composition of the FPD. The proportion of papers indexed by basic interest rose slightly, from 38.84% in April to 39.74% in May. The PAF predicts that the indicator will close 2023 between 38% and 42%. As this type of paper once again attracted the interest of buyers due to the recent increases in the Selic rate, the forecast is that the percentage will rise again in the coming months.

The share of fixed-rate securities (with yield defined at the time of issuance) increased from 24.81% to 26.17%. The PAF predicts that the share of the Federal Public Debt corrected by this indicator will end the year between 23% and 27%.

In recent months, the Treasury has again launched more fixed-rate securities, due to the lessening of the turbulence in the financial market. These bonds are in greater demand in times of economic stability.

With large maturities this month, the share of inflation-adjusted securities in the DPF fell from 32.11% to 29.76%. The PAF predicts that inflation-linked bonds will end the year between 29% and 33%.

Comprised of old domestic debt securities indexed in dollars and the external debt, the weight of the exchange rate in the public debt increased from 4.24% to 4.33%. The public debt linked to the exchange rate is within the limits established by the PAF for the end of 2023, between 3% and 7%.

holders

Financial institutions continue to be the main holders of the internal Federal Public Debt, with a 28.7% share in the stock. Investment funds, with 23.7%, and pension funds, with 23.5%, appear next in the list of debt holders.

The participation of non-residents (foreigners) rose slightly, changing from 9.5% in April to 9.6% in May. Despite the rise, the percentage is still lower than in February, when the share of foreigners in public debt was 9.8%. The other groups account for 14.4% of participation.

Through public debt, the government borrows money from investors to honor financial commitments. In exchange, it undertakes to return the resources after a few years, with some correction, which may follow the Selic rate (basic interest rate of the economy), inflation, the dollar or be prefixed (set in advance).