巴西NTN-B国债收益率飙至8%仍遭冷遇，国库转向LFT发行

The stress of recent weeks in fixed-income markets, which drove a sharp rise in rates on NTN-Bs, Brazil’s inflation-linked government bonds, continued to force changes in the National Treasury’s debt-management strategy. In the auction held on Tuesday (7), the Treasury again made only a token offer of NTN-Bs and focused issuance on LFTs, the public debt securities linked to the Selic benchmark interest rate. Not by chance, the session saw the largest weekly sale of LFTs so far this year, a move that has raised a warning flag in the market. Treasury warns of tax-exempt bond distortions Investors call for repos after another NTN-B auction meets few buyers Treasury, incentivized bonds skewing inflation‑linked yield curve Fixed-income traders heard by Valor said the decision to step up the placement of floating-rate securities was understandable. In Tuesday’s auction, the Treasury issued R$28.9 billion in LFTs and only R$628 million in NTN-Bs, underscoring the concentration in Selic-linked debt. Still, it is worth noting that this was the first issuance of LFTs maturing in September 2032, which made a somewhat larger offer look normal. “Since it was the first issuance, it is natural to place a slightly larger lot,” one fixed-income trader said. He added, however, that the backdrop has been favorable to these securities because “the Treasury is not issuing any NTN-Bs.” That was not limited to Tuesday’s auction. In last week’s sale, the financial volume of the IPCA-linked bond auction totaled just R$596 million. In addition, the sale previously scheduled for June 23 was canceled, fueling speculation about further market interventions. Verbal intervention So far, the Treasury has not carried out buybacks of government bonds, as it did in March. Since late last week, however, Finance Ministry officials have been making verbal interventions through interviews in an effort to calm the secondary market for government debt. To some extent, the strategy has worked. Between Thursday (2) and Tuesday (7), the rate on the NTN-B maturing in May 2029 fell to 8.51% from 8.65%, while the rate on the NTN-B due in May 2035 declined to 8.10% from 8.28%. Even so, real interest rates remain extremely high and continue to send an important warning signal to investors amid very weak demand. In Tuesday’s auction of the 2037 NTN-B, rates came out slightly above consensus, in a possible sign that the Treasury accepted paying a higher premium to place the full amount of securities. “Demand for NTN-Bs has been reduced by the high level of breakeven inflation [the difference between nominal futures rates and real interest rates], which makes the securities relatively less attractive to investors than fixed-rate bonds; by competition from incentivized debentures; and by the fact that pension funds already hold significant stocks of these bonds,” said Sérgio Goldenstein, chief strategist and partner at Eytse Estratégia and a former head of the Central Bank’s open-market department. Debt composition With fixed-rate bond issuance also facing weak demand, Goldenstein said the Treasury is left with “the strategy of concentrating issuance in LFTs, worsening the debt composition but allowing for a longer average issuance maturity and probably a lower cost, while also avoiding additional pressure on nominal and real interest rates.” On fixed-rate bonds, Goldenstein sees higher risk premiums demanded by the market amid a negative fiscal outlook and reduced demand, given the high opportunity cost, the prospect of a restrictive Selic for a prolonged period, low appetite from multimarket (multi-asset) funds, and weaker demand from foreign investors. “Structural demand for fixed-rate bonds will only recover when the country adopts a consistent fiscal adjustment and there is a perception that the Selic will return sustainably to single digits,” he said. As for the possibility of Treasury intervention focused on NTN-Bs, Goldenstein said such a move could push up breakeven inflation, which “is already quite high, between 5.3% and 6.3% for intermediate and long maturities.” That, he said, would make NTN-Bs even more expensive compared with fixed-rate bonds and, as a result, weaken demand further. Market strain In the view of Felipe Tavares, chief economist at BGC Liquidez, demand for fixed-rate bonds and for some NTN-B maturities shows that the market is still functioning, even if conditions are far from ideal. “Dysfunction occurs when there is no buyer. There is still some demand, especially in the 2030 and 2035 points. If we look only at the NTN-B market, the situation is very bad. But to say the market is dysfunctional, the bond market as a whole would have to be in that condition, and that is not the case,” Tavares said. Felipe Tavares Rogerio Vieira/Valor According to Tavares, the worsening global environment, combined with Brazil’s domestic backdrop, has increased aversion to some Brazilian assets. In his view, the move was driven by a combination of factors, including deteriorating expectations around Brazil’s elections and a shift in the Federal Reserve’s stance toward a more hawkish tone, meaning one more inclined toward monetary tightening. “The market is not dysfunctional. The outlook is bad,” he said. The relative deterioration in expectations around the election scenario is tied in particular to the absence of discussions about debt sustainability. “The Treasury has gone practically a month without issuing NTN-Bs because there is no longer demand for this security. Everyone who wanted to buy has already bought, and the money has run out. The problem is that the Treasury still needs to sell a lot, and the price it is seeing in the market is extremely high. The point is that it will only find demand at these rate levels. IPCA plus 8% is the price Brazil pays today to finance itself because it cannot get fiscal policy right,” said one fixed-income portfolio manager, speaking on condition of anonymity. Fernando Gonçalves Rogerio Vieira/Valor Fiscal concern For Fernando Gonçalves, superintendent of economic research at Itaú Unibanco, Brazil faces a significant fiscal concern that may be shaping part of the market dynamics, alongside technical moves. “The yield curve at one point priced in the chance of an interest-rate hike as early as the end of this year, which suggests that part of the move is technical. It is not possible to attribute the NTN-B dynamics entirely to fiscal policy, especially because positioning has changed and U.S. rates have also moved substantially,” Gonçalves said. Gonçalves sees asset prices adjusting to the shift in the international backdrop, combined with technical factors and domestic risk. “Things are somewhat mixed, but there is indeed an important fiscal issue in Brazil, and this is a year of many transfers and many stimulus measures. That can hit the market at a very adverse moment, and the effects start to build on each other,” he said.