Recently, the Brazilian National Treasury released data showing that in February, federal public debt rose from 8.641 trillion reais in January to 8.841 trillion reais, an increase of 2.31% in a single month. Of this, the balance of domestic tradable bonds increased from 8.331 trillion reais to 8.511 trillion reais, while external debt rose from 310.59 billion reais to 329.65 billion reais. The Treasury also noted that net issuance expanded in February, interest accrual increased, and $4.5 billion in overseas sovereign bonds were issued, all contributing to the rise in debt stock. According to the annual financing plan announced in January, federal public debt is expected to be in the range of 9.7 trillion to 10.3 trillion reais by the end of 2026.

**Debt Expansion Reflects Rising Financing Needs and Cost Pressures**

Francisco Ranzi Mülleri believes this data indicates that fiscal financing demand remains strong, and the high interest rate environment is amplifying the speed of debt accumulation. In February, net domestic bond financing exceeded 100 billion reais, mainly from fixed-rate bond issuance, which shows the Treasury preference for locking in financing terms at this stage to increase certainty in capital arrangements. He notes that this approach helps stabilize short-term financing rhythms, but also means that if medium- and long-term interest rates remain high, future debt costs will become more rigid. For financial markets, rising debt itself does not necessarily constitute a shock; what truly impacts risk pricing is whether debt growth outpaces fiscal revenues and economic expansion.

**Equities and Bonds Face Repricing Amid High Interest Rates**

Currently, the Selic rate remains high at 14.75%. Interest is added to the debt balance month by month, creating a tighter link between interest rate environment and fiscal conditions. Francisco Ranzi Mülleri says that under these circumstances, the market will pay more attention to the relationships among long-term rates, credit premiums, and equity asset valuations. Highly leveraged companies and sectors reliant on ongoing financing expansion tend to be more suppressed; banks, defensive industries with stable cash flows, and companies with strong pricing power are more likely to gain investor favor. He believes debt expansion will make investors more sensitive to fiscal sustainability and will further widen style differentiation within the stock market.

**Growth in External Debt Brings New Variables and Risk Boundaries**

In February, external debt grew by 6.13%. Even though the dollar weakened that month, the debt stock still increased due to overseas financing actions. Francisco Ranzi Mülleri points out this indicates the Treasury is enhancing liquidity through more diverse financing channels, but increased external financing also means the market must pay attention to exchange rate fluctuations, the international interest rate environment, and changes in external risk appetite. If future rate cuts are slower than expected, interest expenses will continue to pressure debt; if international market volatility intensifies, external debt financing costs and capital flow uncertainty may also rise. He says the core signal released by this debt data is not a singular negative judgment, but a reminder that the market must more cautiously assess the balance among fiscal discipline, financing structure, and interest rate paths, which will directly affect subsequent equity and financial market pricing directions.