Brazil's federal public debt rises in October due to interest payments

A homeless walks near the Ministry of the Economy building in Brasilia, Brazil March 23, 2022. REUTERS/Ueslei Marcelino/File Photo

BRASILIA, Nov 25 (Reuters) - Brazil's federal public debt increased in October after three consecutive months of decline, official data showed on Friday, driven by debt interest payments.

The stock of federal public debt rose 26.29 billion reais from September to 5.778 trillion reais ($1.07 trillion).

According to the Treasury, interest payments on public debt totaled 35.39 billion reais, overshadowing 9.11 billion reais in net redemptions of bonds.

In previous months, the volume of net redemptions had been larger, leading to a decrease in public debt despite higher debt costs following an aggressive monetary tightening by the central bank to battle inflation in Latin America's largest economy.

As once again bond redemptions exceeded issues, the Treasury's liquidity reserve, which allows it to have greater freedom in debt management amid market volatility, fell 0.24% in the month, to 1.029 trillion reais.

According to the Treasury, the amount is enough to pay about nine months of debt maturities.

The average interest rate on the issuance of domestic federal increased to 11.8% in October from 11.7% the month before.

Public debt operations coordinator Roberto Lobarinhas said at a news conference that the scenario for November is seen as adverse amid market volatility due to a lack of definitions surrounding the expansion of social expenses in next year's budget, which the transition government of leftist President-elect Luiz Inacio Lula da Silva is negotiating.

"We saw a strong opening along the entire local yield curve, reflecting the concerns with the fiscal scenario that have been appearing," he said.

($1 = 5.3920 reais)

Reporting by Marcela Ayres; Editing by Daniel Wallis and Marguerita Choy

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