Domestic Bonds

Brazil’s public debt drops 2.89% in March with high bond redemption rate

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Brasília, April 28 (Reuters)Brazil’s federal government debt fell 2.89% in March from February after a four-month rise, due to the large volume of bonds redeemed during the period, official figures showed Thursday.

Total outstanding debt reached 5.565 billion reais ($1.110 billion), the Treasury said, driven by a net bond repayment of 204.7 billion reais, well above the increase in debt. interest of 39.3 billion reais.

Total outstanding domestic debt fell by 2.69 percent to 5,342 billion reais, according to the Treasury.

Luís Felipe Vital, coordinator of public debt operations, said a strong cushion of liquidity allows the Treasury to withstand the large maturity of securities without having to accelerate issuance or carry out low-quality operations.

In March, this reserve fell to 1.073 trillion reais, from 1.278 trillion reais in February, with 1.225 trillion reais of domestic debt due over the next 12 months.

“The decline in the liquidity cushion is almost entirely explained by the net redemption that took place during the month,” Vital said.

The average interest rate on domestic federal debt rose from 9.5% in February to 10.52% in March, amid rising inflation-linked bonds and interest rate bonds.

Brazil’s central bank orders aggressive monetary tightening to tackle double-digit inflation, which has already pushed interest rates to 11.75% from a record low of 2% in March last year .

($1 = 4.9962 reais)

(Reporting by Marcela Ayres Editing by Alexandra Hudson)

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