Treasury placed 1.425 million bills at lower rates | Financial markets

Auction after auction, bill yields are saying goodbye to two-decade highs recorded through 2023. A week after the Treasury opened the year by issuing six- and 12-month notes, today it is the turn of the third and ninth bonds. In both cases, yields fell slightly. The agency subordinate to the Ministry of Economy sold 1997.76 million units in both circulations. That is, within the limits of those 1500-2500 million that were established.

The bulk of the placement was in nine-month bonds. In this case, Spain sold 1,495.35 million bonds at a marginal rate 3.492% lower than the 3.51% bid in December. The remaining 502.41 million corresponded to three-month bills. In this case, the marginal profitability ranges from 3.62% to 3.538%. The fall in yields did not affect demand. Joint procurement orders reached 4.574 million, equivalent to a coverage ratio of 2.29 times.

Tuesday’s auction confirmed that three- and six-month bills are the most profitable. The yield on six-month notes is 3.635%, higher than the 3.42% recorded on nine-month notes and higher than the 3.314% paid on one-year notes.

The fall in yields does not affect the appetite of small investors, who continue to view bills as a better alternative to fighting inflation. Although banks are gradually improving the remuneration of their obligations, very short-term debt instruments still find no competition. Non-competitive orders, which correspond mainly to small investors, for three-month notes reached 227.51 million, compared with 183.23 million recorded at the last auction in 2023. In the case of nine-month bills, demand increased from 333.2 million to 356.16 million.

To meet demand from small investors, the Treasury decided not to cut net bill issuance this year, something that hasn’t happened since 2020, when the pandemic outbreak forced governments to increase debt sales to cover the measures. support the economy. Although there is no reduction in net emissions, the bills still do not include funding. The Treasury will continue to deepen the issuance of medium- and long-term debt to maintain the average duration of the debt portfolio at around eight years. This strategy contributed to a more comfortable handling of monetary tightening. Although interest rates have risen 450 basis points in just a year and a half, the value of the debt portfolio has barely risen 45 basis points.

This Tuesday’s broadcast follows a traditionally syndicated broadcast earlier in the year. Last week, the Treasury sold $15 billion of 10-year debt and investor confidence in the Spanish economy was reflected in purchase orders of 138 billion euros, the highest for syndicated debt since the euro’s creation.

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