More than R$173 billion returned to investors on Monday (15), the maturity date of NTN-B (National Treasury Notes Series B) 2022, according to information from the National Treasury. The newspaper gained spotlight due to the increase in bonuses it has begun offering in recent months.
NTN-Bs, known in direct treasury as IPCA + Treasury, pay investors pre-determined interest, agreed upon at the time of application, plus an IPCA (Extended Consumer Price Index) difference. The fixed price can vary over time, depending on market conditions – this is what happened to the note that expired today.
The papers were not available in the immediate treasury. In the government’s government bond trading system, the shortest maturities for inflation bonds start in 2026. But it can be found in the trading desks or investment platforms of some brokerages.
NTN-B 2022 prices began to rise strongly from mid-May – until then, the paper was trading around 5% to 6% annually. According to Rodrigo Scavioli, head of allocations and funds at XP, bonuses have risen as discussions take root in the government to ease up on fuel and other essentials, such as electricity, in order to control rising inflation.
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• The rate of very short-term government bonds linked to inflation exceeds 12% per annum. Deserves all the effort?
Sgavioli explains that “the market recognized that there would be a window in which inflation could turn negative, as happened in July, and that this would affect the profitability of inflation-linked papers.” In June, the paper offered more than 12% annually, excluding modification by the IPCA. In mid-July, the rate crossed the 25% mark annually. “The rally occurred because, in a deflationary scenario, the market realized that it would have to offer higher prices to ensure investor interest.”
For some investors, accustomed to the much lower bonus currently in Treasury Direct, the escalation looked like an opportunity. But in some cases, the final return on paper can be disappointing.
A survey by Marcelo Freler, a macro strategist at XP, indicates that those who bought NTN-B 2022 between March and the beginning of July received a return below the CDI (the main benchmark for fixed-income profitability), even as the general bond reward rose. Only those who bought the newspaper before March or more recently, from mid-July onwards, made a higher return than the index, when the rate exceeded 18% annually.
This is because deflation corrects the yield of IPCA-linked papers downward – which could end up performing worse than other floating-rate fixed income investments, which are considered safer, in fixed periods, as they did in July.
In the case of NTN-B 2022, the market began negotiating very high rates precisely to compensate for this effect – however, it only really softened when the reward reached much higher levels than usual.
Vinicius Romano, fixed income analyst at Suno, points out that whoever bought this security a month ago, on July 15, earned a return of 1.25%, versus a CDI rate of 1.05% in the period. Although given these circumstances NTN-B did slightly above the fixed-income benchmark, there was no “great opportunity” as one might imagine. “The IPCA was not known at the time, and therefore, the risk was slightly higher than simply applying a CDI,” he says.
Investors who could not beat the CDI, and had not yet lost their money, lost their “opportunity cost”, in Sgavioli’s view – that is, they stopped earning more by making simpler investments. “The investor has taken a greater risk. Tactical moves in fixed income can be implemented at certain times, but they require more attention,” he says.
For him, reinvesting the sums that investors have earned now that the paper has expired can be a challenge. “If investors want to get provisions in inflation papers, it will be necessary to have a long-term perspective, choosing points that are currently paying good rates. We prefer papers that mature between 2026 and 2035, and we try to carry them to maturity.”
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