know a catch before investing

Treasury Direct fixed rate bonds already pay more than 10% a year after the last increase in interest rates, determined by the Copom at the beginning of the month. The most profitable option is the 2031 prefixed with semiannual interest, which can make an investment of R$ 15 thousand, for example, reaching more than R$ 36,700 at the end of the contract, in almost 10 years.

However, these investments, considered conservative, are not exactly guaranteed profitability, analysts warn. Unlike other Treasury Direct bonds, the fixed rate has a catch. See below what this catch is, and if it’s worth investing, according to experts.

prefixed catch

The catch of fixed rate is inflation and the interest rate itself. A bond fixed at 10% a year can be disadvantageous if inflation and interest rates soar, as they have been doing. Those who bet on the fixed rate are, in fact, hoping that both inflation and interest rates will fall — that way, these bonds are very advantageous.

Even though they require some care, investments in the Tesouro Direito prefixed with premiums of around 10% are very attractive.

For Fabricio De Lucca, coordinator of investment advisory at brokerage Terra, the time is favorable to invest in Tesouro Direto Prefixado.

“If these fixed rates go back, it even becomes an opportunity to sell the bond in advance at a high profit,” he says.

He explains that it is in the space between the contracted rate and the future interest rate, determined by the market, that the investor’s profitability lies.

Therefore, if inflation and interest rates start to fall, the investor wins. But the current scenario indicates otherwise and could pose some danger to profitability, particularly of longer-dated bonds.

Among the modalities offered by the Treasury for fixed-rate bonds, De Lucca points out that of 2031 with semiannual payment as the riskiest among them.

“We do not know if, in this period, until the maturity of the security, we will have a period of strong inflation and consequent increase in the Selic. On the other hand, in case of economic stability from the country, this fixed rate becomes very attractive,” he says.

Diversity is the way to avoid losses

The advance of interest paid on bonds prefixed it follows the economy’s interest rates and happens, according to De Lucca, due to the moment of uncertainty in the country’s fiscal trajectory, with the postponement of discussions and voting on tax and administrative reforms in Congress, in addition to inflationary pressure.

to William Cadinhot, specialist in fixed income and strategist at Spiti, the rates are attractive because it is difficult for inflation to remain at such high levels as to justify a sustained increase in the interest rate for the next few years.

Second Cadinhot, “this high inflation is related to a pandemic scenario and not to a strong economic recovery”, which would justify a prolonged high interest rate policy to hold prices down.

Although the rates are attractive, he assesses that, in the coming months, they can improve even more.

“The economic scenario is still uncertain because of the next steps related to the Brazilian’s indebtedness and also because of next year’s elections. These uncertainties may make these medium and long-term assets – 2026 and 2031 – still have rates better,” he says.

Therefore, De Lucca advises investors to diversify.

“The diversification strategy between government bonds with different indexes of remuneration is the most assertive, given that we are not convinced about the trajectory of government bond rates. It makes sense to have securities in your portfolio that pay through post-fixed and inflation-linked indexes as well, such as the Treasury Selic and the IPCA Treasury”, says the analyst.