Public Debt rises 2.38% in April and stands at R$6.03 trillion

The amount of Federal Public Debt (DPF) bond issues, combined with a low volume of redemptions last month, raised the total debt stock by 2.38%, from R$ 5.89 trillion in March to R$6.03 trillion in April. This is a nominal increase of R$ 140.12 billion. The figures were released this Monday (29) by the National Treasury Secretariat, linked to the Ministry of Finance.

“This variation was due to the net issuance (issuances minus redemptions), in the amount of BRL 92.30 billion, and the positive appropriation of interest, in the amount of BRL 48.15 billion, discounting the transfer of BRL 0. 34 billion for the Central Bank’s portfolio”, informed the ministry, in a note.

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

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 domestic Public Securities Debt (in securities) (DPMFi) totaled R$ 116.51 billion, while redemptions were R$ 34.39 billion, resulting in net issuance of R$ 82.12 billion. Special mention should be made of issues of fixed-rate securities (49.55%) and price index-linked securities (29.5% of the total). Floating-rate securities, on the other hand, had a reduction in participation (from 39.08% to 38.84%).

Another R$ 10.19 billion are related to the net issuance of the External Federal Public Debt (DPFe), contracted in the foreign market, totaling R$ 92.30 billion of total net issuance. According to the Treasury, “it is the largest net issue since June 2021”.

Mattress

The liquidity reserve or public debt cushion (financial reserve used in times of turbulence or a strong concentration of maturities), which had fallen in March, rose in April, reaching a level of just over R$ 1 trillion. The growth, in nominal terms, was 1.57%.

Despite the reserve increase, the cushion level guarantees the payment of the next 8.55 months of FPD maturities, a period slightly shorter than the 9.22 months recorded in March. According to the Treasury, the months of May, July and September 2023 will concentrate maturities estimated at BRL 786.33 billion, which explains the reduction in the time span of the mattress.

Composition

With regard to the composition of the FPD, there was a decrease in the participation of the DPMFi, changing from 96.02% in March to 95.98% in April. The participation of DPFe, the external debt, increased slightly from 3.98% to 4.02%.

The share of floating-rate securities increased from 39.08% in March to 38.84% in April. The participation of FPD fixed rate securities increased slightly, from 24.7% in March to 24.81% in April. The share of price index-linked securities registered a slight increase, from 32% to 32.11%. The values ​​are in line with the 2023 PAF projections.

holders

Financial institutions continue to be the main holders of the internal Federal Public Debt, with a 28.82% share in the stock, a slight increase in relation to the month of March. Investment funds maintained the stock, with 23.57%, and pension funds (pension), with 23.51%, appear next in the list of the largest debt holders.

The participation of non-residents (foreigners) dropped from March to April, changing from 9.7% in February to 9.5%. The relative stability occurred despite the turbulence in foreign markets, marked by crises in North American and European banks. The other groups (which include the government, insurance companies and others) account for around 14.6% 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 can follow the Selic rate (basic interest rate of the economy), inflation, the dollar or be prefixed (set in advance).