The maturity of more than R$250 billion in fixed-rate public bonds (with interest defined in advance) made the Federal Public Debt (DPF) fall for the second month in a row. According to figures released today (24) by the National Treasury, DPF went from R$ 5.443 trillion in September to R$ 5.373 trillion in October, a 1.29% decrease.
Despite the fall in October, the Treasury predicts that the DPF will rise in the coming months. According to the Annual Financing Plan (PAF), revised at the end of May, the DPF stock should end 2021 between R$5.5 trillion and R$5.8 trillion.
Domestic Public Securities Debt (in securities) (DPMFi) dropped 1.54%, from R$5.186 trillion in September to R$5.106 trillion in October. Last month, the Treasury redeemed R$125.83 billion in bonds more than it issued. This is due to the maturity of R$ 268.01 billion in fixed rate bonds.
The fall in DPMFi was not greater only because of the appropriation of R$ 45.14 billion in interest. Through the appropriation of interest, the government recognizes, month by month, the correction of interest on bonds and incorporates the value into the stock of public debt.
After having dropped to BRL 72.03 billion in August, issuance rose again in October. Last month, the Treasury issued R$146.42 billion, the highest level since May. DPMFi redemptions totaled R$272.52 billion, mainly influenced by the maturity of fixed rate securities, which traditionally occurs in the first month of each quarter.
The debt did not fall further because of the external Federal Public Debt (DPFe), which rose 3.77%, from R$ 257.7 billion in September to R$ 267.41 billion in October. The main factor was the 3.74% appreciation of the dollar last month.
Mattress
In recent months, the Treasury had intensified the issuance of public bonds to restore the public debt cushion (financial reserve used in times of turmoil or strong concentration of maturities). This reserve dropped from BRL 1.128 trillion in September to BRL 1.011 trillion in October.
Currently, the mattress covers almost a year of public debt maturities. In the next 12 months, the maturity of R$ 1.138 trillion in federal bonds is expected.
In the first months of the covid-19 pandemic, the government burned part of this mattress to compensate for instability in the financial market. In October of last year, the Central Bank had to transfer to the Treasury R$ 325 billion to help rebuild this reserve. The rest is being done with new issues.
In April, the Amendment to the Constitution of the New Fiscal Framework, originating from the Emergency PEC, reinforced the cushion with over R$ 140 billion from the untying of the surplus from public funds.
Composition
The maturity of fixed-rate securities (with a defined yield at the time of issuance) changed the composition of FPD. The proportion of this type of paper dropped from 32.58% to 29.04%. The PAF predicts that the indicator closes 2021 between 31% and 35%. The Treasury predicts that participation will increase again in the coming months because there will be no fixed rate maturities until the end of the year.
The share of bonds linked to the Selic rate (basic interest rate in the economy) rose from 33.95% to 36.15%. The PAF predicts that the portion of the Federal Public Debt corrected by this indicator will end the year between 33% and 37%. This type of paper has once again attracted the interest of buyers due to recent increases in the Selic rate.
The share of inflation-adjusted bonds in FPD increased from 28.48% to 29.57%. Composed of former internal debt securities adjusted in dollars and by the external debt, the weight of the exchange rate on the public debt went from 4.99% to 5.24%. Both types of indexes are within the limits established by the PAF for the end of 2021, between 26% and 30% for papers linked to inflation and between 3% and 7% for exchange rates.
Holders
Financial institutions continue to be the main holders of the internal Federal Public Debt, with a 28.8% share in the stock. Investment funds, with 23.8%, and pension funds, with 22.7%, appear next in the list of debt holders.
Despite the financial market turmoil in October, the participation of non-residents (foreigners) rose slightly from 10.1% in September to 10.5% in October. The percentage is at its highest level since February 2020, before the covid-19 pandemic began. The other groups account for 14.3% of participation, according to data collected in the month.
Through public debt, the government borrows money from investors to honor financial commitments. In exchange, it undertakes to return the funds after a few years, with some correction, which may follow the Selic rate (basic interest rate on the economy), inflation, the dollar or be fixed in advance (set in advance).
