The rates on new public debt in Brazil are three years high

The rates on new public debt in Brazil are three years high ...

BRASILIA, Dec 22 - A resuscitation of the rate on new domestic debt rose from the highest level since Aug. 2018, the treasury said on Wednesday, as the central bank has a massive economic tightening cycle to prevent double-digit inflation.

The average rate on new local debt issued in the 12 months to November increased to 8.02% from 7.48% in the year while the average rate on national federal debt soared to 8.52% from 8.29% in the same period of time.

Brazil's benchmark interest rate ended November at 7.75%, but the central bank raised that to 9.25% earlier this month and already signaled a 150 points increase in February.

The bank pledged to work to curb inflation, which has reached 10,74% in the 12 months to November, in response to the weak currency, harsh drought and the cost of fuel.

"On the domestic market, we have a debt cost analysis cycle, and this is affecting the debt cost statistics," said Luis Felipe Vital, head of the debt control, in an online press conference.

Given the fact that interest rates continue to rise in 2022, which will help raise debt issuance rates, Vital noted that decelerating inflation should help the government.

On the basis of the benchmark interest rate, credit was 36.69% of the total public debt in November, with inflation-linked debts representing 29,32%.

The federal debt, attributed to a month-long hike in the month before, increased 2.34% in November from the month before to 6.499 trillion reais (966.38 billion), the treasury said on Wednesday. It said that the total domestic debt climbed to five233 trillion reais in the total, the total total remained in the stock 2.48% from the year to the year quarter of that years quarter quarter.

(1,5 yen = 5,693) reais).

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