MercoPress. South Atlantic News Agency

Brazil moving to cut share of inflation-linked federal debt bonds

In February interest payments on debt increased reaching 16.24 billion Real

Brazil's federal public debt rose in March as the government issued more debt than it redeemed and paid higher servicing costs, the national treasury said on Monday.

The federal debt in marketable securities rose 1.6% over February to 1.61 trillion Real with net debt issuance at 6.87 billion Real and interest accumulated on the debt totalling 16.39 billion Real. In February interest payments reached 16.24 billion Real.

The share of fixed-rate bonds in March jumped to 35.62% of total issuances this year from 34.72% the month prior.

The share of inflation-linked bonds rose to 29.8% compared to 29.56%, while the proportion of securities indexed to the central bank's Selic lending rate fell to 35% from 35.99% the month prior.

Brazil's National Treasury aims to boost the share of fixed-rate bonds in its overall debt to reduce interest rate-related risk.

President Dilma Rousseff's government has pledged to lower Brazil's ratio of debt to GDP by the end of her four-year term. In spite of 50 billion Real in budget cuts it announced in February, which were designed to help ease inflationary pressure, expectations for 2011 consumer price hikes have continued to rise.

The central bank last week raised the Selic rate for the third time this year by 25 basis points to 12%.