Foreigners invested less in Brazilian government bonds in March, as per the Monthly Report on the Federal Public Debt.
Released last Friday (Apr. 27) by the Finance Ministry, the report shows that the share of investors overseas went from 12.39% in February to 11.84% in March—from $123.52 billion to $119.72 billion in nominal terms.
The participation of foreigners has been greater. In 2014, their share was reported at 18.6%; in 2015, it hiked to 18.8%; in 2016, the amount slid to 14.3%; in 2017, 12.1%.
Márcia Tapajós, public debt operations coordinator at the National Treasury, described the monthly slips as marginal, “but they have indeed been observed successively,” she remarked.
The declines, she argued, are linked to the reductions in the country’s benchmark interest rate, the Selic, which is currently at its lowest level in history—6.5% per annum. This also pulls down a significant part of the interest paid by the Treasury to investors, rendering bonds less inviting.
“What happens, in the view of these investors, is that the special interest for other emerging [countries] is no longer significant, so they choose to seek investment elsewhere,” she stated.
Despite the fall in foreign investment, Tapajós said that the scenario is not alarming, “especially because our holders structure is well distributed, with no particular concentration on a single segment.”
The report also shows that the biggest public debt holders in March were Investment Funds, with 29.21%. Social Security Funds came second, with 22.80%, followed by financial institutions, with 22.39%; foreign investors, with 11.84%; the government, 4.38%; insurers, 3.85%; and others, 5.53%.
Bonds
Bonds are notes issued by the National Treasury to pay the public debt. In exchange for lending money to the government, investors are given a guarantee of profit, which varies according to the bond acquired.
The monthly report released by the Treasury shows that Brazil’s public debt—which includes both Brazil’s domestic and foreign indebtedness—increased 1.51% in March, reaching $1.048 trillion.
