|FOCUS28/06/20191FOCUS|EM28June2019Brazil:Inflowsfromnon-residentsbackontrackKEYMESSAGESNon-residents’shareofBrazilianlocalpublicdebtincreasedby0.2%m/minMay,withtotalinflowsamountingtoBRL10.6bn(~USD2.7bn),accordingtotheMinistryofFinance’slatestdata.Inthelastfivemonths,non-residents’inflowsamountedto~USD15.2bn.Thisisthefirsttimesince2015thatwehaveseeninflowsforfiveconsecutivemonths.WeestimatecurrentpublicdebtexposuretonominalratestobeUSD64.4mnDV01.Ourupdatedlocalmacrofundpositioningmodelsuggeststhatlocalmacrohedgefundsarebullishonrates,BRLandBrazilianequities.EMSTRATEGYNon-residents’shareoflocalpublicdebtincreasesslightlyNon-residents’shareofBrazilianlocalpublicdebtincreasedby0.2%inMayandnowstandsatBRL476bn(~USD121bn).Inflows,meanwhile,amountedtoBRL10.6bn(~USD2.7bn).Furthermore,non-residents’shareoftotalpublicdebtincreasedto12.7%duringthemonth,representing31.4%ofinternationalreserves(currentlyatUSD386bn).BRL(bn)May-19m/m%y/y%Apr-19May-18DomesticPublicDebt3,735%ofTotal0%5%3,723%ofTotal3,574%ofTotalFinancialInstitutions82222.0%2%3%80621.6%80022.4%LocalFunds99326.6%2%3%97226.1%96326.9%PensionFunds92724.8%-3%4%95225.6%89225.0%Non-residents47612.7%2%11%46512.5%42712.0%GovernmentInstitutions1524.1%-6%-1%1624.3%1544.3%InsuranceCompanies1524.1%1%10%1504.0%1383.9%Others2145.7%-1%7%2165.8%2005.6%PublicDebtHoldingsPublicDebtHoldingsbyForeigners(%)44.4%46.1%4.1%4.8%0.7%Fixed-ratecouponbonds(NTN-F)Fixed-ratebulletbonds(LTN)Inflation-linkedbonds(NTN-B)Floating-rateBondsOthers22.0%26.6%24.8%12.7%4.1%4.1%5.7%FinancialInstitutionsLocalFundsPensionFundsNon-residentsGovernmentInstitutionsInsuranceCompaniesOthers11%14%17%20%250350450550Jan-15Dec-15Nov-16Oct-17Aug-18Foreigners'participationinBrazilianlocaldebt(BRLbn)Foreigners'participationinBrazilianlocaldebt(%,RHS)(20)(10)-102030Jan-15Dec-15Nov-16Oct-17Aug-18MonthlyForeigners'Flows(BRL,bn)Table1andFig.1-4:BreakdownofpublicdebtSources:BloombergLLP,Brazil’sMinistryofFinance(MinistériodaFazenda),BNPParibasSamuelCastro,EM/LatamS...
