Brazil Treasury Projects Record 53% Floating-Rate Public Debt

The National Treasury of Brazil revised its annual financing plan on Wednesday, projecting that public debt linked to the benchmark Selic rate could reach a record 53% of the outstanding stock this year. This is an increase from the previous forecast of 46% to 50%.

Treasury officials attributed the shift toward floating-rate bonds to investor preferences for shorter-duration instruments amid high interest rates and market volatility. Consequently, the government lowered its forecasts for inflation-linked debt to 21% to 25% and fixed-rate securities to 20% to 24%. This composition increases the government's vulnerability to borrowing costs while the benchmark rate remains at 14%.

Gross public debt has reached 81.9% of GDP, marking an increase of over 10 percentage points since President Luiz Inacio Lula da Silva took office. The total federal debt stock rose to 9.289 trillion reais in July.