Influenced by the high level of interest, the Federal Public Debt (DPF) rose in November and surpassed the R$7.2 trillion mark. According to figures released this Thursday (26) by the National Treasury, the DPF went from R$7.073 trillion in October to R$7.204 trillion last month, an increase of 1.85%.
Despite the increase in November, the DPF is within the expected band. According to the Annual Financing Plan (PAF), presented at the end of January and revised in September, the DPF stock must end 2024 between R$7 trillion and R$7.4 trillion.
The internal Public Securities Debt (in securities) (DPMFi) rose 1.71%, rising from R$6.748 trillion in October to R$6.863 trillion in November. Last month, the Treasury issued R$56.88 billion in more bonds than it redeemed, mainly in bonds adjusted by the Selic Rate (the economy’s basic interest rate). However, the main factor of variation was the appropriation of R$58.75 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 12.25% per year, the appropriation of interest puts pressure on government debt.
Last month, the Treasury issued R$82.98 billion in DPMFi bonds, the lowest volume since October last year, and redeemed R$26.1 billion. The majority of issuances (R$50.37 billion) occurred to meet the demand for bonds adjusted by the Selic Rate (the economy’s basic interest rate).
In the external market, the external Federal Public Debt (DPFe) rose 4.78%, rising from R$325.22 billion in October to R$340.76 billion last month. The increase was driven by the appreciation of the dollar, which rose 4.77% last month. The dollar began to soar in June, influenced by the delay in the start of the fall in interest rates in the United States and by the elections in the country.
Mattress
For the second month in a row, the public debt cushion (financial reserve used in times of turbulence or strong concentration of maturities) rose. This reserve went from R$822 billion in October to R$856 billion last month.
Currently, the mattress covers 7.25 months of public debt maturities. Over the next 12 months, around R$1.29 trillion of DPF is expected to mature.
Composition
Due to the demand for securities linked to the Selic, the proportion of securities adjusted by basic interest rates rose from 45.91% in October to 46.13% in November. The PAF review predicts that the indicator will close 2024 between 44% and 47%, against a previous estimate of 40% to 44%. This type of paper attracts the interest of buyers due to the high level of the Selic Rate. The percentage could rise even further in the coming months due to the prospect of a rise in the economy’s basic interest rates.
Without a large volume of maturities, the proportion of fixed-rate securities (with yield defined at the time of issuance) remained stable, going from 22.19% in October to 22.14% in November. The new version of the PAF expects the indicator to close 2024 between 22% and 26%, against the previous target of 24% to 28%.
At the beginning of the year, the Treasury had launched more fixed-rate papers again. However, the return of market instability has compromised issuances, because these bonds are in lower demand at a time of economic instability and rising interest rates.
The share of inflation-adjusted bonds in the DPF fell slightly, from 27.31% to 27.01%. The revised PAF predicts that inflation-linked bonds will end the year between 25% and 29%, while the previous target was between 27% and 31%.
Composed of old domestic debt securities corrected in dollars and external debt, the weight of the exchange rate in public debt rose from 4.58% to 4.72%, mainly driven by the correction of interest rates on external debt. The public debt linked to the exchange rate is within the limits established by the PAF for the end of 2024, between 3% and 7%.
Term
The average DPF term fell from 4.16 to 4.12 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
Financial institutions remain the main holders of internal Federal Public Debt, with a 28.4% share of the stock. Pension funds, with 23.7%, and investment funds, with 22.1%, appear next on the list of debt holders.
Even with the turbulence in the global financial market, the participation of non-residents (foreigners) rose, from 10.7% in October to 11.2% in November. The percentage is at the highest level since December 2018. The other groups have a 14.5% share.
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).
