What are treasury bills, what yield will they have in 2024 and where to buy to invest
This On Tuesday, February 13, 2024, there will be a new auction of Treasury bills, which in this case will be for three and nine months.. Still waiting for its profitability, we can use as a guide the one that was set at the corresponding auction on January 16: interest rates were 3.538% (three months) and 3.492% (nine months).
If you are interested in this auction, then you are not the only one. Treasury bills are all the rage right now. The repeated increases in interest rates by the European Central Bank (ECB) have led, among other things, to money increases its value.
However, this fact was not accompanied by an increase in the revaluation of deposits of Spanish banking institutions. This has resulted in the current Treasury bill yield. (short-term fixed income assets) be more attractive than leaving savings in a checking account.
Another factor that has helped spark this boom around Treasury bills is the low risk of the asset since it is government guaranteed.
The Treasury’s own website details that Treasury bills “are short-term fixed income securities.” They are issued “at a discount or premium, so its acquisition price may be lower or higher than the amount the investor will receive at the time of recovery.”
Consequently, “the difference between the compensation value of the bill (1000 euros) and its acquisition price will be the yield generated by the treasury bill“,” the organization explains.
In addition, the Treasury clarifies that “the specified income is exempt from withholding under both personal income tax and corporation tax, without prejudice to the fact that they must be included in the annual return for specified taxes.”
The minimum investment in treasury bills is 1000 euros, which corresponds to the value of each bill., although in reality the amount to be paid is a pre-deposit set before the auction. In the case of treasury bills today the margin is 101%, that is, 1010 euros per security.
Treasury Bill Yield
Getting down to the numbers, at the Treasury Bill auction held last Tuesday, February 6, The yield on six-month bills was 3.688%. In turn, the yield on twelve-month bills amounted to 3.359%. This is a margin that is below the levels seen in early 2023.
Relatively three- and nine-month bills, auction will take place on February 13. As already mentioned, at the last auction the yield on three-month bills was 3.538%, on nine-month bills – 3.492%.
How to Invest in Treasury Bills
exist three formulas To invest in treasury bills:
1. Bank of Spain office: You need to go to a branch of the Bank of Spain with your DNI (original or copy), credit account details and money to invest (the operation can be carried out by transfer).
2. Website of the State Treasury: You must select the “securities trading service” option. To invest this way, you must have a digital certificate or DNIe.
3. Financial entities (banks or savings banks)and securities companies or agencies.
However, it should be noted that The latter option will entail a commission from the banking institution.which does not happen in the other two alternatives.
Meeting at the Bank of Spain office
Precisely, the hidden reason (besides high demand) is the desire to save on the commission that banks charge for conducting the operation. after queues up to 50 meters long were recorded at the Bank of Spain headquarters in Madrid at the beginning of 2023.
The organization’s response, to avoid such an expectation, was to require those individuals who wish to personally invest in treasury bills toMake an appointment for Bank of Spain direct accounts.
Another option is not to pay a commission carry out the operation through the electronic headquarters of the State Treasury.. However, a large influx of investors may lead to temporary interruptions in the operation of the site.