Brazil debt climbs in June as yield curve flattens, issuance surges

BRASILIA, July 28 (Reuters) - Brazil's federal public debt grew 2.77% in June from the previous month to 7.883 trillion reais ($1.41 trillion), the Treasury said on Monday, reflecting a strong pace of bond issuance in a month when the local yield curve flattened.

In a presentation, the Treasury highlighted that interest rates on domestic debt issuance declined more sharply at longer maturities, as markets adjusted expectations around monetary policy.

Last month, Brazil's central bank raised its benchmark interest rate to a nearly 20-year high of 15%, but signaled a pause in its tightening cycle at its next policy meeting, scheduled to end on Wednesday.

According to the Treasury, debt issuance reached 177.1 billion reais in June, while redemptions totaled 17.9 billion reais. Interest payments amounted to 53.5 billion reais.

In the first half of the year, the stock of federal public debt grew by 567.1 billion reais, driven by 392.8 billion reais in interest and 174.3 billion reais in net issuance.

The 12-month average cost of domestic debt issuance rose to 13.52% from 13.38% in May.

($1 = 5.5966 reais)