The issuance of interest-linked bonds caused the Federal Public Debt (DPF) to rise in October. According to figures released this Thursday (27), in Brasília, by the National Treasury, the DPF went from R$8.122 trillion in September to R$8.253 trillion in October, an increase of 1.62%.
In August, the indicator surpassed the R$8 trillion barrier for the first time. According to the Annual Financing Plan (PAF), revised in Septemberthe DPF stock should end 2025 at between R$8.5 trillion and R$8.8 trillion.
The internal Public Securities Debt (in securities) (DPMFi) increased 0.31%, going from R$7.82 trillion in September to R$7.948 trillion in October. Last month, the Treasury issued R$41.38 billion in more bonds than it redeemed, mainly in bonds linked to the Selic Rate. To this net issuance was added the appropriation of R$85.23 billion in interest.
Through the appropriation of interest, the government recognizes, month by month, the correction of interest that accrues on bonds and incorporates the value into the stock of public debt. With the Selic Rate (the economy’s basic interest rate) at 15% per year, the appropriation of interest puts pressure on government debt.
Last month, the Treasury issued R$162.59 billion in DPMFi bonds. However, even with the high volume of fixed-rate bond maturities in October, redemptions were smaller and totaled R$119.86 billion.
The external Federal Public Debt (DPFe) rose 1.17%, going from R$301.53 billion in September to R$305.06 billion in October. The main factor was the 1.24% rise in the dollar last month, amid tensions between Donald Trump’s government and China.
Mattress
After a fall in September, the public debt cushion (financial reserve used in times of turbulence or strong concentration of maturities) rose again in October. This reserve went from R$1.032 trillion in September to R$1.048 trillion last month. The main reason, according to the National Treasury, was the net issuance (issuances minus redemptions) last month.
Currently, the mattress covers 8.81 months of public debt maturities. Over the next 12 months, R$1.434 trillion in federal bonds are expected to mature.
Composition
With the strong issuance of bonds adjusted by the Selic, the composition of the DPF varied as follows from September to October:
• Selic-linked securities: 47.47% to 48.19%;
• Inflation-adjusted bonds: 26.81% to 26.68%;
• Prefixed titles: 22.02% to 21.44%;
• Exchange-linked securities: 3.7% to 3.68%.
The PAF predicts that the titles will close the year in the following intervals:
• Selic-linked securities: 48% to 52%;
• Inflation-adjusted bonds: 24% to 28%;
• Prefixed titles: 19% to 23%;
• Exchange-linked securities: 3% to 7%.
Normally, pre-fixed securities (with rates defined at the time of issuance) indicate more predictability for public debt because the rates are defined in advance. However, in times of instability in the financial market, issuances fall because investors ask for very high interest rates, which would compromise the government’s debt management.
In relation to securities linked to Selic (the economy’s basic interest rate), these securities are attracting the interest of buyers due to the recent increases promoted by the Central Bank’s Monetary Policy Committee (Copom). The exchange rate debt is made up of old domestic debt securities corrected in dollars and external debt.
Term
The average term of the DPF fluctuated from 4.16 to 4.14 years. The Treasury only provides the estimate in years, not months. This is the average interval in which the government takes to renew (refinance) public debt. Longer deadlines indicate greater investor confidence in the government’s ability to honor its commitments.
Holders
The composition of holders of the internal Federal Public Debt was as follows:
• Financial institutions: 32.21% of stock;
• Pension funds: 22.97%;
• Investment funds: 21.21%;
• Non-residents (foreigners): 10.46%
• Other groups: 13.2%.
Despite the greater tension in the financial market in October, the participation of non-residents (foreigners) increased compared to September when it was 10.19%. In November last year, the percentage was 11.2% and had reached the highest level since September 2018, when the share of foreigners in public debt was also 11.2%.
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 in the economy), inflation, the dollar or be prefixed (defined in advance).
