By Marcela Ayres and Bernardo Caram
BRASILIA (Reuters) -Brazil plans to return to international debt markets later this year after successful issuances in the first half, Treasury Secretary Rogerio Ceron said in an interview last week, adding that a new sustainable bond is also under consideration.
“Brazil has a very favorable risk spread,” Ceron told Reuters. “We will definitely remain active in external markets in the second half.”
Latin America’s largest economy raised $2.5 billion in dollar-denominated sovereign bonds in February and $2.75 billion in June. The last time Brazil conducted more than two sovereign bond sales abroad in a single year was in 2014.
Ceron acknowledged investor concerns over the country’s rising public debt, but noted that similar trends are playing out across major economies.
Amid a global reallocation of assets driven by shifts in U.S. economic policy, he said Brazil stands out due to its high share of local-currency debt and elevated real interest rates, an increasingly attractive combination as inflation eases.
These factors, he said, have fueled strong capital inflows, reflected in a currency that has gained more than 10% this year, rising corporate bond issuances, more foreign participation in public debt markets and gains in local equities.
“There’s a significant interest rate differential and a macro environment that makes sharp currency depreciation unlikely, since capital is flowing in. So it’s almost a perfect window for non-resident investors to allocate funds here and benefit,” Ceron said.
With debt rollovers running at about 140% of maturities, well above the historical average around 100%, Brazil’s Treasury has ramped up domestic issuance, mainly to capitalize on what Ceron called “a great moment” in the market, while also preparing for potential volatility ahead of the 2026 election.
He left open the possibility of revising the Annual Financing Plan (PAF) to extend the current strategy through year-end, with a decision expected next month.
“We’ll evaluate together whether it’s better to maintain the current pace or dial it back to stay within the PAF,” Ceron said.
Ceron also pointed to last week’s successful sale of inflation-linked bonds at yields below 7%, the lowest since last year.
Amid a dispute between the government and Congress over a decree raising the IOF tax levied on some financial transactions, the secretary defended the measure as essential to meeting next year’s fiscal target.
He also stressed the need for congressional approval of an executive measure to harmonize income tax rates on financial investments and impose a 5% levy on currently tax-exempt debt securities.
(Reporting by Marcela AyresEditing by Gabriel Araujo, Brad Haynes and Nick Zieminski)
Comments