The public treasury announced a medium and long-term debt auction this Thursday, offering 6,442.17 million euros, aligned with the high end of expectations and signaling an approachable stance to investors. Green bonds drew significant attention with yields near 4.5 percent, according to data published by the Bank of Spain.
Investors retained interest in Spanish debt securities, yet overall demand for the three benchmarks auctioned, totaling 11,638.28 million euros, did not reach twice the amount ultimately awarded in the market.
The Treasury entered the market in the second October issue with a new five-year reference priced at 3.5 percent coupon; a nine-year and ten-month maturity security with a 2.35 percent coupon; and an 18-year and ten-month maturity security carrying a 1 percent coupon, including the Green Bond issue.
The Green Bond program, launched in September 2021, was restarted for the fifth time and reopened for the second time in 2023. The issue collected 1,604.18 million euros with a marginal yield of 4.486 percent, against a demand of 2,494.19 million euros, higher than the previous auction in April 2023 when the yield stood at 3.812 percent. This performance reflects sustained investor appetite for sustainability-linked debt.
According to information from the Ministry of Economic Affairs and Digital Transformation, the addition of this 1.6 billion to the 1.441 billion auctioned in April pushed the 2023 joint issuance to roughly 3.0 billion euros and increased the total outstanding bonds to about 11.2 billion euros.
For the five-year reference with a 3.5 percent coupon, the Treasury allocated 3,549.57 million euros against bids totaling 6,144.64 million with a marginal yield near 3.65 percent.
Finally, with remaining life of nine years and ten months, State obligations were awarded at 1,288.44 million euros with a 2.35 percent coupon, yielding about 3.985 percent on demand of 2,999.46 million.
Raised short-term interest rate above 3.8% on Tuesday
Last Tuesday, the Treasury issued 4.572 million euros in short-term debt, including six and twelve-month bills, offering returns above 3.8 percent.
The improvement in rates, in step with the ECB’s recent hikes, has preserved a steady appetite for Spanish securities. Total demand for these two references nearly doubled, reaching 9,158 million euros in requests.
This October sequence will continue with three- and nine-month bills on the 17th, followed by other bond issues on the 19th.
Treasury’s 2023 targets
The Undersecretariat of the Treasury reports gross exports for 2023 around 256.93 billion euros, up 8.2 percent from the 2022 forecast due to higher interest rates.
The net debt of the Public Treasury is expected to remain near 70 million for the year. When broken down by instrument, Treasury Bills are projected to contribute negative net financing of about 5,000 million, while government bonds and other euro and foreign currency denominated liabilities will help balance the remaining 75,000 million.