The low volume of maturities and high interest rates made the Federal Public Debt (DPF) rise in May. According to figures released today (28) by the National Treasury, the DPF rose from R$5.59 trillion in April to R$5.702 trillion last month, an increase of 2.01%.
The May figures were released on time, but the April statistics were presented a month late because of the National Treasury analysts’ strike. In the previous month, the DPF had grown 0.45%, due to the appropriation of interest.
Despite the May result, DPF remains below the R$5.73 trillion recorded in February. The Treasury forecasts that the DPF will rise in the coming months. According to the Annual Financing Plan (PAF), presented at the end of January, the DPF stock should end 2022 between R$6 trillion and R$6.4 trillion.
Domestic Public Securities Debt (securities) (DPMFi) rose 2.17%, from R$5.36 trillion in April to R$5.476 trillion in May. Last month, the Treasury issued BRL 65.4 billion in bonds more than it redeemed, mainly in fixed-rate papers (with fixed interest rates) and in papers adjusted by the Selic rate (basic interest rates in the economy).
In addition to the net issuance, there was the appropriation of R$ 50.81 billion in interest. Through the appropriation of interest, the government recognizes, month by month, the correction of the interest levied on the bonds and incorporates the value into the stock of public debt. With the Selic rate (basic interest rates in the economy) rising since August of last year, interest appropriation increases.
Last month, the Treasury issued BRL 86.06 billion in DPMFi bonds. However, redemptions totaled R$ 20.67 billion, almost all in inflation-adjusted bonds, which usually mature in the second month of each quarter.
The dollar’s fall in May also contributed to reducing government indebtedness. External Federal Public Debt (DPFe) dropped 1.71%, from R$230.19 billion in April to R$226.27 billion in May. The main factor was the 3.87% drop in the dollar last month.
Mattress
After two consecutive months of decline, the public debt cushion (financial reserve used in times of turmoil or strong concentration of maturities) rose in May. This reserve increased from BRL 1.037 trillion in April to BRL 1.108 trillion last month.
Currently, the mattress covers almost a year of public debt maturities. In the next 12 months, R$ 1.310 trillion in federal bonds is expected to mature.
Composition
The low volume of maturities changed little the composition of the FPD. The proportion of papers adjusted by basic interest rose from 36.66% to 36.80%. The PAF predicts that the indicator will close 2022 between 38% and 42%. This type of paper has once again attracted the interest of buyers because of the recent increases in the Selic rate.
The share of fixed rate bonds (with a yield defined at the time of issuance), which had been falling significantly in recent months, recovered and rose from 26.96% to 27.21%. The PAF predicts that the portion of the Federal Public Debt corrected by this indicator will end the year between 24% and 28%.
The Treasury has launched fewer fixed-rate papers, due to the financial market turmoil in recent months. These bonds are in greater demand in times of economic stability.
The share of inflation-adjusted bonds in the FPD fell, from 32.03% to 31.8%. The PAF predicts that inflation-linked bonds will end the year between 27% and 31%.
Comprising old domestic debt securities adjusted in dollars and the external debt, the weight of the exchange rate on the public debt increased from 4.35% to 4.18%. Public debt linked to the exchange rate is within the limits established by the PAF for the end of 2022, between 3% and 7%.
holders
Financial institutions continue to be the main holders of the internal Federal Public Debt, with a 29.6% share of the stock. Investment funds, with 23.2%, and pension funds, with 23%, appear next in the list of debt holders.
Due to the instability in the international financial market, the participation of non-residents (foreigners) dropped from 9.3% in April to 9.1% in May. The other groups add up to 15.1% of participation, according to the 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 can follow the Selic rate (basic interest rates in the economy), inflation, the dollar or be fixed in advance (set in advance).
