Households monopolize 34% of Treasury bills, with 24,428 million


The Spanish Public Treasury returns to the debt markets this coming week and will hold an auction of 6 and 12 month bills and another of State bonds and obligations, according to the calendar of the body dependent on the Ministry of Economy.

On Tuesday, the Treasury will inaugurate the issues for the month of March with an auction of 6 and 12 month bills. In the last issue of this type, held on February 6, the organization placed 5,035.03 million euros, offering higher returns for 6-month bills and 12-month bills.

Specifically, the Treasury placed 985.03 million euros in six-month bills, compared to a demand of 2,650.28 million euros, with a marginal profitability of 3.688%, above the 3.635% of the previous issue.

In the auction of twelve-month bills, the body dependent on the Ministry of Economy awarded 4,050 million euros, with requests of 6,585.14 million from investors, and the marginal interest was placed at 3.359%, exceeding 3.314% former.

Despite raising the remuneration offered to investors by both references, interest did not reach the maximum levels in a decade achieved last year, which exceeded 3.8%.

The improvement in the interest rates offered, in line with the increases in interest rates by the European Central Bank (ECB) last year, has maintained the markets’ investment appetite for Spanish securities.

Thus, individual investors are showing great interest in purchasing debt, mainly in the short term, given its high profitability, which has grown since the beginning of 2022, especially in the case of shorter-term bills, although it has already stabilized.

According to the latest data published by the Bank of Spain and collected by Europa Press, the high profitability of short-term securities has had a very considerable effect on the distribution of Treasury bill holdings, where households and non-financial institutions For the first time in 2023, they have become the largest holders of this type of debt.

As an example, the participation of households in the purchase of bills has gone from 1,826 million euros at the end of 2022 to 24,428 million in December 2023. Thus, they have significantly increased their participation in the last year, going from a share of 2 .4% in December 2022 to more than 34% in 2023.

After the bill auction on Tuesday, the Treasury will return to the debt markets on Thursday, with an issuance of bonds and State obligations.

Specifically, the organization will auction 5-year State bonds, with a coupon of 3.50%; State obligations with a residual life of 7 years and 8 months and a coupon of 0.50%; 10-year State obligations, with a 3.25% coupon and 15-year inflation-indexed State obligations, with a 2.05% coupon.

The marginal references for this auction are 2.879% for 5-year State bonds; of 3.173% for 10-year State obligations and 1.530% for 15-year inflation-indexed State obligations.

The Treasury has already issued 40,846 million euros in just over a month of the year, 23.6% of its medium and long-term financing program for 2024. The average life of the State debt in circulation reaches 8 years and the average cost of the portfolio is 2.1%.

Overall, the Treasury’s 2024 financing strategy foresees new financing needs of around 55 billion for this year, which represents a reduction of 10 billion compared to 2023.

For its part, the expected gross issuance will amount to 257,572 million euros, 2% higher than in 2023 due to the increase in amortizations, and the bulk will be covered by the issuance of medium and long-term instruments with the aim of maintaining the average life of the public debt portfolio.

Within the Treasury’s strategy for 2024, it is planned to once again resort to syndications for the issuance of certain references of State Obligations.

Other objectives for 2024 will be to maintain the diversification of the investor base and commit to the issuance of green bonds as a structural element of the financing program, thus strengthening the sustainable finance market.