The Treasury once again raises the yield on 3-month bills in its latest auction
The Public Treasury has placed this Tuesday 2,235 million euros in a new auction of three- and nine-month billssomewhat below the expected average range, and has done so by raising profitability to three months, but lowering it to nine months, according to data published by the Bank of Spain. Demand for Spanish securities has remained robust, given that investor requests have touched 5,000 million eurosmore than double what was finally awarded.
Specifically, the agency dependent on the Ministry of Economy has placed 884.98 million euros in three-month bills, below the slightly more than 2,000 million requested, and the average marginal interest was 1.928%, slightly above the 1.920% offered in the previous auction of the same paper. In the case of 9-month bills, the Treasury has awarded 1,350 million euros, also well below the almost 3,000 million demanded, but in this case the marginal profitability has dropped slightly to 1.966%, compared to the previous 1.979%.
On Thursday it hopes to raise up to 5,000 million
After this Tuesday’s auction, the Treasury will return to the markets on Thursday, when expects to place between 4,000 million and 5,000 million euros in an auction of State obligations, the last issue that will be held this October. Specifically, the agency plans to allocate State obligations with a residual life of 5 years, with a coupon of 1.25%; State obligations with a residual life of 7 years, with a 2.55% coupon and 10-year State obligations, with a 3.20% coupon. The reference marginal interest rates for this auction are 3.023% for State obligations with a residual life of 7 years and 3.234% for State obligations with 10 years.
Funding program for 2025
At the end of September, the Public Treasury announced a cut in its financing needs for this year by 5,000 million euros given the “strength” of Spain’s economic growth, which is why its net debt issuance program goes from 60,000 million initially planned to 55,000 million.
Currently, the average cost of outstanding debt currently stands at 2.28%. That is, only 64 basis points from its historical low of 1.64% in 2021, barely a quarter of the accumulated increase of 250 basis points in official interest rates in the same period.
On the other hand, the average cost of issuance is reducing in recent monthsconverging to the average cost of debt in circulation and limiting the upward path of the latter. Thus, the average issuance cost for 2025 until the month of August stands at 2.75%, below the 3.16% of last year.
All of this has contributed to the financial burden of the State debt on GDP remaining contained, around 2%, close to its minimum of 1.88% in 2021 and far from the maximum of 2.92% registered in 2014, the Ministry of Economy has highlighted. In 2025, the Treasury has also maintained the objective of diversifying the investor base and has continued to support the issuance of green bonds as a structural element of the financing program, thus strengthening the sustainable finance market in Spain.
To this end, the Treasury has continued to reopen the green bond issued in 2021 with the aim of reaching a volume similar to that of the rest of the Treasury curve references in the coming years and continuing to contribute to the financing of projects for the ecological transition. In total, 48 ordinary auctions of bills and bonds and State obligations are planned to be held. Furthermore, in 2025 the Treasury will once again resort to syndications for the issuance of certain references of State Obligations.
