Brazil's federal public debt rises in May as interest payments outpace redemptions

BRASILIA, June 27 (Reuters) - Brazil's federal public debt rose 0.71% in May from the previous month, reaching 7.67 trillion reais ($1.40 trillion), the Treasury said on Friday, as interest payments outweighed the impact of net redemptions.

Interest expenses totaled 79.9 billion reais in the month, while net redemptions amounted to 26 billion reais.

Year-to-date, federal debt has increased by 354.42 billion reais, largely driven by interest payments of 339.3 billion reais. Net debt issuance over the same period totaled just 15.1 billion reais.

The month also saw a renewed increase in the average cost of 12-month domestic debt issuance, which rose to 13.38%, up from 13.05% in April.

Brazil's debt burden continues to be pressured by elevated interest rates, with nearly half of the public debt linked to the benchmark Selic rate, as well as by persistent inflation, which has remained above the official 3% target, affecting the cost of inflation-linked bonds.

The central bank has hiked rates by 450 basis points since launching a tightening cycle in September, bringing the Selic to 15% in an effort to rein in stubborn inflation.

($1 = 5.4761 reais)