BRASILIA (Reuters) -The average cost of Brazil’s domestic debt issuance rose to the highest level in more than eight years, Treasury data showed on Wednesday, as elevated interest rates and persistent inflation continue to weigh on the country’s debt profile.
The cost reached 13.05% in April, up from 12.61% the previous month and the highest since January 2017.
Local currency debt accounts for 96% of the total public debt in Latin America’s largest economy.
Brazil’s debt burden is under pressure from high interest rates – nearly half of the public debt is linked to the Selic rate – as well as persistent inflation, which has long remained above the 3% target, making inflation-linked bonds more expensive.
The central bank has raised interest rates by a total 425 basis points to 14.75% since it began a tightening cycle in September to curb sticky inflation. Annual consumer prices reached 5.40% in mid-May.
According to Treasury data, Brazil’s total public debt stock, including external debt, rose 1.44% in April from the previous month to 7.617 trillion reais ($1.34 trillion).
Gross debt issuance totaled 204.6 billion reais, while redemptions reached 164.6 billion reais, resulting in net issuance of 40 billion reais. The debt stock was also impacted by 68.3 billion reais in interest payments, the Treasury said.
Year-to-date, Brazil’s public debt has increased by 300.6 billion reais, driven by 259.4 billion reais in interest payments and net issuance of 41.2 billion reais.
($1 = 5.6894 reais)
(Reporting by Marcela Ayres; Editing by Chris Reese and Gabriel Araujo)
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