improve your profitability in February

This development supported the investment appetite of the markets for Spanish securities, as the combined demand for both certificates almost doubled the amount of requests, amounting to 9,235.42 million euros. Specifically, the Treasury issued six-month bills worth €985.03 million, against a requirement of €2,650.28 million, and offered a marginal yield of 3.688%, up from the previous issue’s 3.635%.

In the auction of twelve-month bills, a body dependent on the Ministry of Economy allocated 4,050 million euros against investor requests amounting to 6,585.14 million, and the marginal interest rate was set at 3.359%, higher than the previous 3.314%. Despite the increase in rewards offered to investors by both links, the percentages fall short of the decade-high level reached last year, which topped 3.8%.

Interest rates

Tuesday’s auction comes after the Governing Council of the European Central Bank (ECB) recently decided to keep interest rates on hold, so the base rate for refinancing operations will remain at 4.50%, the deposit rate will remain at 4% and the loan is 4.75%.

The issuing institution thus left rates unchanged for the third straight meeting since it slammed on the brakes at its October meeting after ten consecutive hikes in the price of money, taking it to its highest level in more than 20 years. years. Monetary policy decisions are impacting Treasury auctions, which have seen an increase in rewards offered to investors in recent months in line with rising rates. This has led to increased interest in debt purchases, especially in the case of households purchasing Treasury bills.

There is an interesting fact. The number of households and private non-profit organizations serving households (Isflsh) increased from €950 million in treasury bills in November 2022 to 23,977 million in the same month of 2023. For the fourth month in a row, the largest holders of short-term bonds of this type are term debt.

According to the latest data published by the Bank of Spain, high yields on short-term securities have had a very significant impact on the distribution of stocks of treasury bills, in which households and non-financial institutions have markedly increased their participation in the past year. will increase from a share of 1.3% in November 2022 to more than 30% in 2023.

After increasing their assets by 4.7% compared to October, households became the largest holders of Spanish treasury bills in November for the fourth time in history, ahead of foreign investors (16.737 million), who have been reducing their holdings since July. in this type of debt.

The next holders of treasury bills after foreign investors are monetary financial institutions (10.918 million), money market funds and other financial intermediaries (10.189 million), non-financial corporations (6.015 million) and government administrations (4.104 million).

Financing program

The Treasury’s 2024 funding strategy foresees new funding requirements of around €55,000 million this year, representing a reduction of €10,000 million compared to 2023 requirements. 2023 due to increased depreciation, and the main part will be covered by the issue of medium- and long-term instruments in order to maintain the average term of the government debt portfolio.

In relation to regular issues of treasury securities, 48 ​​regular auctions of government bills and bonds are planned. In addition, in 2024, the Treasury will again use syndication to issue certain certificates of government obligations.

Other goals for 2024 will be to maintain a diversified investor base and commit to issuing green bonds as a building block of the financing program, thereby strengthening the sustainable finance market in Spain.