Public Treasury Bonds Auction Outcomes and Market Context
On Thursday, the public treasury invested 6,425.41 million euros in a government bond auction that was anticipated to be mid-to-high in the range. The allocation reflected higher yields on two of the three references issued, according to data from the Bank of Spain. Investors continued to show strong interest in Spanish debt securities, with total demand for the three references exceeding 9,000 million euros, yet the awarded amount did not fully match the market appetite. (Fuente: Bank of Spain)
Within this auction, the Treasury offered bonds with varied maturities. The seven-year issues carried a coupon of 0.80% and were accompanied by a high demand yet modest returns. The ten-year bonds carried a 3.15% coupon and have a remaining life of 25 years and six months, delivering a 2.70% coupon. (Fuente: Bank of Spain)
For the seven-year state bonds, the agency placed 2,276.24 million euros while processing requests totaling 3,428.35 million, with a marginal rate of 3.272%, down from the previous 3.527%. On the ten-year side, the Treasury tapped 2,756.62 million euros against 3,811.71 million in demand, setting a marginal rate of 3.520%, higher than the last auction at 3.416%. Finally, the 25-year and six-month maturity issued 1,392.55 million euros from requests of 1,792.58 million, with a marginal rate of 3.940%, above the prior 3.439%. (Fuente: Bank of Spain)
Earlier in the week, the Undersecretariat of Treasury published details of another operation offering three- and nine-month bonds. It invested 1,985.36 million euros in these shorter instruments, with investors receiving yields of 2.940% and 3.199% respectively. (Fuente: Bank of Spain)
All of these movements occur in a climate shaped by ongoing rate hikes from major central banks. The European Central Bank recently raised rates by 50 basis points, keeping the refinancing rate at 3.50%, the deposit rate at 3.00%, and the lending rate at 3.75%. This marks the sixth consecutive increase in the cost of money, and sits at its highest level since October 2008. The context remains unsettled due to turbulence in the financial sector after the intervention of two U.S. banks, alongside concerns about European bank stability tied to Credit Suisse. (Fuente: ECB and central bank communications)
2023 Treasury Targets
New data from the Ministry of Economy show that, so far this year, 36.4% of the planned medium and long-term financing has been realized. The average life of outstanding government debt stands at 7.85 years, with the portfolio’s average cost around 1.83%. Gross issuance is projected to rise by 8.2% to 256,930 million euros, reflecting adjustments driven by higher interest rates. (Fuente: Ministry of Economy)
Net indebtedness is expected to stay at 70,000 million euros for 2023. Within instrument types, Treasury Bills are forecast to contribute about 5,000 million euros of net negative financing, while government bonds and liabilities are anticipated to provide the remaining 75,000 million euros, with a portion denominated in foreign currencies. (Fuente: Ministry of Economy)