Brazil treasury issues record $32.6bn debt in October

BRASILIA: Brazilian government borrowing rose to a monthly record in October, Treasury figures showed on Wednesday, as it strove to meet growing financing needs and build up its cash buffer to give it more flexibility in the months ahead.

With the government requiring large amounts to fund its pandemic-fighting emergency support and income transfer programs, the Treasury said it issued 173.3 billion reais ($32.6 bln) of debt in October, a new record.

After redemptions, net issuance was 76 billion reais.

Brazil must roll over 605 billion reais of debt in the first four months of next year, with April's 283 billion reais a monthly record both nominally and as a share of the economy.

Luiz Fernando Alves, public debt manager at the treasury, said on Wednesday that a transfer of cash from the central bank earlier this year and increased issuance recently means that funding hump is covered.

"We have always been sure, and now we are even clearer that we have prudential levels of cash," Alves said in a virtual news conference.

Three quarters of the new debt issued in October was in fixed rate bonds, replacing the 92.4 billion reais of fixed-rate bonds that matured in the month, the Treasury said. Again, most of that was six and 12 months paper, to meet investor demand for shorter-term, less risky borrowing.

October's borrowing lifted Brazil's total federal public debt by 2.5% from the month before to 4.64 trillion reais, while the total domestic debt stock also rose 2.5% to 4.39 trillion reais.

Investors' reluctance to lend to the government long-term pushed up the share of debt maturing in the next 12 months to 27.6% of the total from 26% in September, the Treasury said.

The average interest rate on domestic debt issues in the 12 months to October fell to a new all-time low of 4.52% from 4.64% the month before, as shown by the lighter orange line in the treasury chart below.

The average maturity of the overall public debt stock, meanwhile, fell to 3.77 years from 3.83 years in September, and the average maturity of the domestic debt stock fell to 3.57 years from 3.63 years.