BRASILIA, Reuters – Brazil’s Federal Public Debt increased by 2.03% to 5.73 Trillion reais ($1.21 TILLION) in February. The Treasury reported Wednesday that the Treasury stated this while issuance costs continued rising due to high inflation and higher interest rates.

According to Treasury data, domestic total debt increased 2.3% during that period to 5.49 trillion RAI.

In January, the average interest rate for domestic federal debt rose to 9.5%, from 8.9% in January. Meanwhile the average rate of new domestic debt issued during the twelve months ended February was 9.25% (from 8.92%).

In a statement, the Treasury stated that the average monthly issuance rate started at a lower level but increased from week two, during a time of inflationary pressures due to Russia’s invasion.

Although risk aversion continued into March, the Treasury noted a recent ease in the yield curve. This was due to the strong currency performance and central bank signals that they should stop its aggressive tightening cycle.

Brazil’s benchmark rate of interest has already increased to 11.75% from a record low of 2.2% in March. The chief economist at the Central Bank Roberto Campos Neto stated that the bank would announce a 100-basis point hike in May.

We are impressed by the Brazilian market’s resilience from the perspective of debt management. Roberto Lobarinhas, deputy general coordinator for Public Debt Operations, stated that interest rates and exchange rates had shown a positive reaction to the Eastern European conflict.

($1 = 4.7508 reais)