Spain’s Public Treasury closes short-term debt sale near 2 billion euros
On a recent trading day, Spain’s Public Treasury completed a short-term debt auction, allocating 1,997.76 million euros to investors. The operation reduced the yields offered on both the three-month and nine-month benchmarks, while demand remained robust, underscoring sustained investor appetite for Spanish securities even as rates eased. Total bids exceeded the amount issued, with participants signaling eager interest by submitting bids totaling 4,574 million euros.
In the three-month portion, the Treasury distributed 502.41 million euros against bids of 1,658.03 million euros, delivering a marginal yield of 3.538 percent, down from 3.620 percent previously. For the nine-month securities, 1,495.35 million euros were issued amid bids reaching 2,915.97 million euros. The marginal yield stood at 3.492 percent, slightly below the prior 3.510 percent.
Retail participation remained a major driver of the auction, with individual investors maintaining strong demand for short-term notes due to attractive returns. Retail holdings rose to nearly 23,000 million euros by the end of October, representing more than 31 percent of the total Letters in circulation and marking the highest level on record. This growth contrasted with 2.4 percent at year-end and positioned retail investors as the main holders of these instruments.
Medium and long-term debt anticipated to reach several billion on Thursday
The Treasury is slated to run another market operation on Thursday and expects to place between 5.5 billion and 6.5 billion euros in medium and long-term debt auctions, wrapping up the January issuance cycle. A three-year government bond is anticipated, featuring a 2.50 percent coupon and an estimated remaining life of about three years. State debt with a 1.25 percent coupon spans 15 years, while longer maturities carry a 3.90 percent coupon. The reference rates for this round are around 2.592 percent for three-year notes and 3.593 percent for 15-year bonds.
A month of record-demand for syndicated issues
The opening month of the year showcased exports totaling 15 billion euros and introduced a new 10-year syndicated bond maturing on April 30, 2024, which drew a record 138 billion euros in demand. The issue matures on April 30, 2034 and carries a coupon of 3.25 percent, lower than the 3.55 percent coupon on the last 10-year issue in June 2023. Its yield stands at about 3.259 percent, roughly nine basis points higher than in 2023. The current 10-year benchmark points to October 2033.
Interest was broad-based, spanning 512 investment accounts, illustrating a wide geographic and investor-type mix that characterized this new state obligation.
Spain’s 2024 Treasury financing plan
The 2024 financing plan calls for needs around 55,000 million euros for the year, a reduction of 10,000 million from 2023. Gross issuance is projected at 257,572 million euros, marking about a 2 percent increase from the prior year. Depreciation adjustments are planned, with emphasis on longer-term instruments to sustain the average life of the public debt portfolio. Regular Treasury bond issuance will comprise 48 auctions, including ordinary Bills, Bonds, and Government Obligations. In 2024, the Treasury will again rely on syndication for some debt references.
Other goals for 2024 include continuing investor-base diversification and issuing green bonds as part of the financing program to reinforce sustainable finance in Spain.