Spain’s households hold the title as the largest groups of owners of public debt, driven by a recognizable demand for short-term government securities. In August, the Bank of Spain reported that households invested 20.348 billion euros in these instruments, marking the highest level since the statistics began in 2002. This compares with 35 million euros in the same month of 2022 and represents a year-over-year increase of 1.825 billion euros, or 9.8 percent versus July. The trend underscores a shift toward public debt products as households seek safer, liquid assets in a time of volatility.
In August, households held 28.6 percent of a total stock that reached 70.913 billion euros. A year earlier, households commanded a small presence, holding only about 0.04 percent of these securities in circulation, a small share that dramatically expanded as families increased their exposure. Foreign owners still held the second-largest stake at 27.5 percent, but their portfolio has retreated since February 2022 (8.7 percent in August versus July). In May, families entered the Spanish debt market more decisively, and their relative weight continued to rise thereafter. Banks accounted for 14.06 percent, companies 9.3 percent, mutual funds 7.9 percent, publicly traded administrations 5.2 percent, insurers 3.7 percent, pension funds 1.8 percent, and the Bank of Spain 0.4 percent. These shifts illustrate a broader realignment in ownership of sovereign and related securities across the Spanish market, with households emerging as a key driver. [Source: Bank of Spain attribution]
There was an extraordinary uplift in interest rates as a result of the government’s Treasury bill program over the last year. During August auctions, rates paid on three-month bills ranged from 0.145 percent to 0.795 percent for one-year bills, compared with last year’s settlements of 3.507 percent to 3.664 percent. The divergence is tied to the European Central Bank’s policy stance aimed at taming inflation, including successive rate hikes. The ECB moved the basic rate from 0 percent to 4.5 percent and, since July 2022, the deposit facility rate has shifted from negative territory to a positive 4 percent. These changes directly impact the returns on household deposits and short-term debt instruments. [Source: Bank of Spain attribution]
Too little for deposit
The growing interest in household savings and investment also reflects banks’ response to higher rates. Banks have held back on raising the cost of term deposits even as official rates climbed. The average yield on new deposits rose to 0.17 percent in August 2022, climbed to 2.31 percent, and by last August remained about that level, still notably below the euro area average of 3.03 percent. Additionally, approximately 90 percent of stored funds in bank accounts were tied to current payments that yielded only 0.13 percent. These figures highlight a persistent gap between the potential returns on ordinary deposits and the broader market rates, which influences household choices in asset allocation. [Source: Bank of Spain attribution]
Regarding Treasury debt with maturities beyond one year, households closed July with an estimated investment of 1.943 million euros in these instruments, representing 999 million euros more than a year earlier and 51 million more than in July. Investments in debt issued by autonomous communities also rose over twelve months, though more modestly, moving from 53 to 72 million euros. The data reflect a steady shift toward longer-term public instruments as households seek balance between risk and return in a evolving rate environment. [Source: Bank of Spain attribution]
Similarly, the value of individual investments in companies shows notable activity. In August, there was a 0.48 percent decrease from July and a 20 percent increase compared with August 2022, totaling 87.471 million euros. The behavior of investors across the same periods reveals a mixed pattern: citizens reduced their holdings in these companies by 261 million euros over a year, yet increased investments compared with July, by 805 million. This reflects a dynamic investor sentiment that weighs short-term performance against longer-term growth prospects for domestic firms. [Source: Bank of Spain attribution]