Public Debt rises 0.63% in March and stands at BRL 5.89 trillion

The high volume of maturities of securities linked to the Selic rate (the economy’s basic interest rate) kept the Federal Public Debt (DPF) below R$ 6 trillion in March. According to numbers released this Wednesday (26) by the National Treasury, FPD went from R$5.856 trillion in February to R$5.893 trillion last month, up 0.63%.

The Treasury forecasts that the FPD will rise in the coming months. According to the Annual Borrowing Plan (PAF), presented at the end of January, the FPD stock should end 2023 between BRL 6.4 trillion and BRL 6.8 trillion.

The Domestic Securities Public Debt (in securities) (DPMFi) rose 0.74%, changing from R$5.617 trillion in February to R$5.658 trillion in March. Last month, the Treasury redeemed R$ 19.75 billion more in securities than it issued, mainly in securities linked to the Selic. The internal debt only rose because of the appropriation of R$ 61.2 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 168.59 billion in DPMFi bonds. With the high volume of maturities in March, redemptions totaled R$ 188.34 billion.

On the foreign market, the drop in the dollar in March reduced the government’s indebtedness. The External Federal Public Debt (DPFe) dropped 2%, from R$ 239.14 billion in February to R$ 234.36 billion in March. The main factor was the fall of 2.45% of the US currency last month.

Mattress

After rising in February, the public debt cushion (financial reserve used in times of turbulence or a strong concentration of maturities) fell again in March. This reserve went from R$996 billion in February to R$974 billion last month. The main reason, according to the National Treasury, was the high concentration of maturities in March.

Currently, the mattress covers 9.22 months of public debt maturities. In the next 12 months, the maturity of R$ 1.437 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 40.64% in February to 39.08% in March. 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 23.74% to 24.7%. The PAF predicts that the share of the Federal Public Debt corrected by this indicator will end the year between 23% and 27%.

The Treasury has launched fewer fixed-rate papers, due to the turmoil in the financial market in recent months. These bonds are in greater demand in times of economic stability.

With no large maturities this month, the share of inflation-adjusted securities in the DPF rose from 31.29% to 32%. The PAF predicts that inflation-linked bonds will end the year between 29% and 33%.

Composed of old domestic debt securities indexed in dollars and the external debt, the weight of the exchange rate in the public debt increased from 4.34% to 4.22%. 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 28.1% share in the stock. Investment funds, with 23.8%, and pension funds, with 23.4%, appear next in the list of debt holders.

The participation of non-residents (foreigners) dropped slightly, changing from 9.8% in February to 9.7% in March. The relative stability occurred despite the turbulence in foreign markets, marked by crises in North American and European banks. The other groups add up to 15% 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).