The public treasury announced deposits of 4,840.34 million euros into six and twelve month bills during a Tuesday auction. The results fell within the expected mid-range, delivering returns above 3% for both short and medium-term instruments, according to data released by the Bank of Spain on Tuesday.
Rising interest rates, aligned with the European Central Bank’s policy moves, have kept demand steady for Spanish securities. Both bill references attracted strong interest, with total demand reaching 8,247 million euros, nearly doubling the initial offering and signaling robust investor appetite.
The auction highlighted cautious optimism among individual investors, drawn by the higher yields available in short-tenor bills versus the low returns seen on many bank deposits. Since the start of 2022, profitability on these short issues has improved, enhancing appeal for non-institutional buyers.
Specifically, 803.28 million euros were sold in semi-annual bills, with demand around 3,000 million euros and a marginal yield of 3.005 percent. This figure sits slightly below the prior issue, which yielded 3.164 percent.
For the twelve-month tenor, the treasury offered 4,037.06 million euros and faced demand of roughly 5,299 million euros. The marginal rate stood at 3.169 percent, drifting below the previous level of 3.335 percent.
It will return to the market on Thursday
The treasury plans another auction on Thursday, featuring a slate of government bonds and bills. Among these, green bonds are expected to draw attention, with issuance guidelines aiming to raise between 5,500 million and 6,500 million euros.
The portfolio for Thursday includes three-year government bonds with a 2.80 percent coupon, a ten-year bond at a 3.15 percent coupon, a 15-year inflation-linked bond with a 0.70 percent coupon, and longer-dated bonds alongside a green bond issue with a 1 percent coupon.
In terms of prior performance, auction results showed marginal yields of 3.441 percent for the three-year bonds, 3.376 percent for the ten-year issues, and 1.176 percent for the 15-year inflation-linked notes, with green bonds at 3.601 percent.
The treasury intends to reopen the green bond program, first issued in September 2021, marking it as a permanent element of financing strategy. This marks the first reopening in 2023 to support ecological transition commitments.
The green bond recalibration for 2023 is part of Spain’s broader effort to align financing with environmental goals while maintaining prudent debt management practices.
2023 Treasury targets
Gross issuance for the year is projected at 256,930 million euros, reflecting an 8.2 percent uptick over earlier forecasts driven by the higher interest-rate environment. Net debt for 2023 is expected to stay around 70,000 million euros. Within instrument mix, negative net financing for treasury bills is anticipated at about 5,000 million euros, with government bonds and other liabilities contributing the balance to reach approximately 75,000 million euros in net terms.
The ongoing financing plan aims to balance liquidity needs with the evolving rate landscape, ensuring robust funding while supporting the state’s ecological and structural commitments. This approach aligns with Spain’s strategic objectives for debt management and fiscal stability, as reported by national authorities and market observers.