BRASILIA (Reuters) – Brazil expects its public debt to surge by as much as 13.5% in 2024 and plans to advance in its debt-lengthening strategy, according to the Annual Financing Plan released by the country’s Treasury on Tuesday.
Public debt is expected to range between 7 trillion reais and 7.4 trillion reais in 2024, compared with 6.520 trillion reais ($1.31 trillion) in 2023.
In the document, the Treasury unveiled plans to advance in the debt-lengthening strategy, particularly for fixed-rate securities, now incorporating 72-month National Treasury Notes (LTN) among the offered securities.
Following its inaugural issuance of sustainable sovereign bonds in 2023, the Treasury anticipated maintaining a “regular presence” in this market, “primarily aiming at the development of the sovereign interest rate curve, serving as a benchmark for both the Treasury and the Brazilian corporate sector.”
According to the plan, the average maturity of Brazil’s debt profile is expected to range between 3.8 and 4.2 years in 2024, compared to 4 years in 2023.
Additionally, the proportion of debt maturing over the next 12 months is projected to be between 17% and 21%, compared with 20.1% recorded last year.
The Treasury acknowledged that the share of securities linked to the benchmark interest rate Selic is expected to rise this year to 40% to 44% of the total, up from 39.7% last year, distancing itself from the targeted level of 23% set for 2035.
The strategy of increasing these securities in the short term is because they have longer maturities on average than fixed-rate securities, contributing to the management of the Brazilian debt refinancing risk, said the Treasury.
It also emphasized that the success of a financing strategy more focused on issuing fixed-rate and long-term inflation-indexed securities depends on “macro-fiscal conditions that enable an agenda of economic growth and debt sustainability.”
($1 = 4.9590 reais)
(Reporting by Marcela Ayres; Editing by Marguerita Choy)
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