Public Debt rises 1.51% in February and stands at R$5.86 trillion

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

The Domestic Securities Public Debt (in securities) (DPMFi) rose 1.48%, rising from R$5.534 trillion in January to R$5.617 trillion in February. Last month, the Treasury issued BRL 33.5 billion more in securities than it redeemed, mainly in prefixed securities (with fixed interest rates) and in securities linked to the Selic, the economy’s basic interest rate. In addition to the net issuance, there was the appropriation of R$ 48.65 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 61.42 billion in DPMFi bonds. With the low volume of maturities in February, redemptions totaled R$ 27.92 billion.

In the external market, the appreciation of the dollar in February increased the government’s indebtedness. The External Federal Public Debt (DPFe) rose 2.21%, changing from R$ 233.98 billion in January to R$ 239.14 billion in February. The main factor was the rise of 2.13% of the US currency last month.

Mattress

After falling in January, the public debt cushion (financial reserve used in times of turbulence or a strong concentration of maturities) rose in February. This reserve went from R$953 billion in January to R$996 billion last month. The main reason, according to the National Treasury, was the low concentration of maturities in February.

Currently, the mattress covers 6.87 months of public debt maturities. In the next 12 months, the maturity of R$ R$ 1.441 trillion in federal bonds is expected.

Composition

The low volume of maturities changed the composition of the FPD. The proportion of papers indexed by basic interest rose slightly, from 40.49% in January to 40.64% in February. 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) also increased slightly, from 23.47% to 23.74%. 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.

Due to the concentration of maturities this month, the share of inflation-adjusted securities in the FPD dropped from 31.74% to 31.29%. 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 4.3% to 4.34%. The public debt linked to the exchange rate is within the limits established by the PAF for the end of 2022, between 3% and 7%.

holders

Financial institutions continue to be the main holders of the internal Federal Public Debt, with a 27.8% share in the stock. Investment funds, with 24.8%, and pension funds, with 22.8%, appear next in the list of debt holders.

The participation of non-residents (foreigners) remained stable, remaining at 9.8% in February. The stability occurred despite the turmoil in external markets. The other groups account for 14.9% 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).