Adds details, context
BRASILIA, Dec 27 (Reuters) – Brazil’s federal public debt rose in November, Treasury data showed on Tuesday, as the government chose to increase its liquidity reserve despite high issuance costs.
Total debt rose 1.6% in November from the month before to 5.871 trillion reais ($1.11 trillion), still below the target set by the Treasury between 6 trillion and 6.4 trillion reais for the year.
The increase was driven by net debt issues of 41.25 billion reais and by interest payments on public debt that totaled 51.31 billion reais.
The Treasury’s liquidity reserve, which had been falling in recent months, rose by 11% in November over October, to 1.14 trillion reais.
According to the government, the amount is enough to pay 9.3 months of debt maturities ahead. In 12 months, maturities add up to 1.41 trillion reais.
The Treasury’s decision to boost the liquidity reserve took place amid high issuance costs, with the central bank keeping the basic interest rate at a 13.75% cycle high to tame inflation pressures.
Public debt operations coordinator Roberto Lobarinhas said the state-owned development bank BNDES also helped the liquidity reserve to rise with the prepayment of 46.6 billion reais to the Treasury this month.
The Treasury also highlighted that the yield curve increased both in November and this month, pointing to market expectations of higher interest rates for longer. It said this reflects fiscal concerns over the public debt trajectory after Congress approved the spending package to boost social welfare spending to support low-income Brazilian families in 2023.
The average interest rate on the issuance of domestic federal debt grew to 11.9% in November from 11.8% the month before.
($1 = 5.2884 reais)
(Reporting by Marcela Ayres; Editing by Aurora Ellis)
((marcela.ayres@thomsonreuters.com; +55 11 5047-2444;))
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