Treasury bills once again offer more profitability to investors after the ‘stop’ in rates

The ‘pause mode’ in which the European Central Bank (ECB) is in regarding interest rates, with the organization’s deposit facility stabilizing at 2%, its lowest level since December 2022, encourages investors to demand higher profitability for Spanish debt. All of this, after seven consecutive cuts, adding up to eight reductions in total and with demand that continues to double supply due to the good macroeconomic moment that the Spanish economy is going through. Specifically, the Treasury has placed this Tuesday 2,524.811 million euros in a bill auctionin the expected mid-range, and has done so by raising the profitability offered to investors both for the three-month bills and for the nine-month reference, according to data published by the Bank of Spain. It also helps that this is the last auction to be held in the month of August as the issuance of State bonds and obligations scheduled for the 21st has been cancelled, as is usual this month.

Specifically, the agency dependent on the Ministry of Economy has placed 900 million euros in three-month billscompared to a demand of 2,086.617 million euros, and the marginal interest has been placed at 1.940%, higher than the 1.914% offered in the previous auction of this same type of paper. At the auction of nine-month bills, the Treasury has awarded 1,624.811 million eurosalso below the requests of more than 3,477 million, and the marginal profitability has risen in this case from the previous 1.920% to the current 1.969%.

Demand continues to double supply

Investors continue to show interest in Spanish securities, given that The joint demand for both issues has exceeded 5,565 million of euros, managing to double what was finally awarded in the markets. After this issue, the Treasury will return to debt markets on September 2with an auction of six- and twelve-month bills, which will be followed by another auction of State bonds and obligations that same week, on Thursday, September 4.

In total, the Public Treasury foresees new financing needs of around 60,000 million for this fiscal year 2025, which represents an increase of 5,000 million compared to 2024, due to the need to respond to the reconstruction and relaunch of the areas affected by the Dana catastrophe. In gross termstotal emissions will reach 278,000 million euros, 7.4% more compared to the end of 2024, due to the higher volume of amortizations and the slight increase in net emissions.