Brazil’s Treasury raised its forecast for floating-rate debt to a record 49%-53% of total outstanding debt in 2024, up from a prior projection of 46%-50%. The revision reflects heightened market volatility and elevated interest rates, which have increased investor preference for shorter-duration instruments less sensitive to rate fluctuations.
The updated annual financing plan also adjusted projections for other debt types. Inflation-linked debt was lowered to 21%-25% from 23%-27%, while fixed-rate securities were cut to 20%-24% from 21%-25%. Foreign-exchange-linked debt remained unchanged at 3%-7%.
Gross public debt rose to 81.9% of GDP, an increase of more than 10 percentage points since President Luiz Inácio Lula da Silva took office. The federal debt stock totaled 9.289 trillion reais ($1.8 trillion) as of July, up 0.22% from the previous month. Real yields on very long-dated bonds remain above 7%.
The central bank’s benchmark Selic rate remains at 14%, while 12-month inflation stood at 4.2% in mid-August. The Treasury attributed the shift in debt composition to a combination of volatility and high borrowing costs, which have driven demand for floating-rate instruments.
The revisions come as Brazil’s debt profile continues to evolve amid persistent inflation pressures and monetary policy constraints.
