Rare Treasury Direct title wins today – Money Times

Rare Treasury Direct title wins today – Money Times
Rare Treasury Direct title wins today – Money Times
Nowadays, the Treasury Direct website trades these 3 bonds and 2 more which are the IPCA + with semiannual interest (formerly NTN-B) and the Fixed Rate with semiannual interest (Image: REUTERS / Bruno Domingos)

The title of the direct treasure NTN-C 2021 wins today. It is possible / probable that you do not know what an NTN C is and that is why I came to write that text today!

Formerly the name of direct treasury bonds had codes. O HICP+ Principal was an NTN B Principal. A Selic Treasury is called LFT and the Prefixados were the famous LTN.

Nowadays the Treasury Direct website trades these 3 bonds and 2 more which are the IPCA + with semiannual interest (former NTN-B) and the Fixed Rate with semiannual interest (former NTN-F).

But other securities have already been traded. This is the case with a dollar-indexed security, the NTN-D.

There was also a security indexed to the IGP-M, which is the famous NTN-C. The NTN-C 2021 expires today, 01/04/2021. But there is still the NTN-C 2031.

Not being traded on the Treasury website does not mean that you are unable to invest in them anymore. It is possible through the secondary market at some brokerages.

History of the Treasury Direct linked to the IGP-M

NTN-C was offered by the Treasury between 2002 and 2006. This means that they stopped being traded by the Treasury Direct well before the change in the names of the securities, which happened in 2015. Therefore, I will continue to call it NTN-C when instead of Treasury Direct IGP-M.

The idea of ​​the title is analogous to today’s IPCA Treasury. Even the IGP-M, like the IPCA, is an indicator that measures inflation. Each has its own formula, which causes different IGP-M and IPCA values ​​for the same period.

Comparison of IPCA + 2030 with IGPM_ 2031

It is worth noting that the most used indicator for inflation in general applications in Brazil is the IPCA.

Investors were very fond of the NTN-C due to the fact that the IGP-M tends to rise faster than the IPCA, giving greater profitability.

This was even one of the reasons why the National Treasury decided to retire the title. The IGP-M was more volatile and grew faster. If this is a good thing for the investor, for the borrower, in this case, the National Treasury, that was terrible.

To give you an idea, take a look from 2019 on here as was the monthly variation of IGPM and IPCA and the accumulated.

IGPM and IPCA volatility
Month-to-month indexers
Accumulated indexes from 2019 to today

For this reason, in 2006 NTN-C stopped being traded through the Tesouro Direto portal and can only be traded on the secondary market today.

What is IGP-M

IGP-M means the General Market Price Index. It is calculated by FGV, while the IPCA is calculated by IBGE.

It is a composition of 3 different indices, the IPA-M which represents wholesale inflation, the IPC-M which measures retail inflation and the INCC-M which measures inflation in the construction sector.

Although the IPCA is the most common index to be used to measure inflation, the IGP-M is often used to adjust certain types of contracts, such as electricity, telephony, rent and so on.

Since the beginning of the pandemic, Brazilian inflation has started to accelerate. This can be seen by the IPCA, but it was more evident with the IGP-M.

To give you an idea, the IGP-M reached 28% from February 20 to February 21. This means that many people had their house / apartment rent readjusted by almost 30% from one year to the next.

What is the representativeness of IGP-M treasury in the RV base

Despite being very attractive in terms of profitability, NTN-C, or IGP-M Treasury has a low representation among users’ direct treasury bills.

While securities linked to the Selic correspond to almost 36% and the HICP + at 33%, NTN-C corresponds to only 0.01% of assets in Tesouro Direto.

Table

The explanation is simple: it stopped being traded in 2006. At that time, Tesouro Direto had not yet won the investor’s heart.

In fact, at that time, few people thought about investments. The staff used to leave the money in savings or invest in real estate.

Looking back, we have evolved a lot since 2006, right?

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