Brazil Public Debt Rises 1.9% in April

Brazil Public Debt Rises 1.9% in April

Brazil's public debt rose 1.91% in April from the previous month, Treasury data showed on Wednesday, in a period marked by strong issuance of securities linked to the benchmark interest rate and volatile yields amid external uncertainty.

The outstanding stock reached 8.798 trillion reais ($1.74 trillion), still below the 9.7 to 10.3 trillion reais range targeted for 2026 under the Treasury's annual financing plan.

Issuance and Redemption Details

Debt issuance totaled 229.96 billion reais in the month, including 28.87 billion reais equivalent in euros in the government's first operation in that currency since 2014, as part of President Luiz Inacio Lula da Silva's effort to expand fundraising in international markets this year. Redemptions amounted to 146.01 billion reais in April.

Floating-Rate Securities Share Increases

Floating-rate securities linked to the Selic benchmark increased their share of total debt to 48.59%, up from 47.71% the previous month, reflecting the Treasury's preference for such instruments in recent auctions. The Selic currently stands at 14.50%.

In a presentation, the Treasury said risk aversion driven by the external environment amid the U.S.-Israel conflict with Iran has supported demand for floating-rate bonds. As of May 26, such securities accounted for 69.7% of total debt offered to the market this month, compared with an already high 56% in April.

Central bank chief Gabriel Galipolo said earlier this month that Brazil's heavy reliance on debt indexed to the benchmark Selic rate weakens monetary policy transmission, as higher interest rates end up boosting disposable income for bondholders.