Spain’s Public Treasury priced a new bond and bill auction on Thursday, raising a total of 6.065 billion euros within the mid-range forecast. The three-year yield edged higher, approaching 3%, according to data from the Bank of Spain.
Investor demand remained exceptionally strong, topping 12.5 billion euros and more than doubling the amount actually awarded. This signals sustained appetite for Spanish government debt in the latest auction of March.
Specifically, the Ministry of Economy sold 2.9 billion euros of the three-year security, with demand exceeding 6.7 billion and the marginal yield at 2.899%, versus 2.883% on the prior issue of the same paper.
In the eight-year-and-four-month residual maturity bond, the Treasury sold 1.460,11 billion euros, also below the 2.635 billion requested, with a marginal yield of 2.987%.
Finally, in the 20-year bond, 1.705,49 billion euros were placed, compared with demand of 3.24 billion, and the marginal yield stood at 3.652%, beneath the 4.139% offered in the previous issue of the same type.
Bidding activity and rate trends
Concluding this auction week, financing activity took place as the European Central Bank opted to keep rates unchanged. Reflecting the higher return environment, the Treasury increased the yields offered, notably for short-term letters. Earlier in the month, yields on six-month and twelve-month letters rose to 3.715% and 3.516% respectively.
Despite these higher remunerations, the peaks reached in the previous decade, when some reference yields topped around 3.8%, were not revisited in this cycle.
In the case of three- and nine-month letters, the Treasury offered higher yields on the nine-month reference (3.578%), while the three-month reference was trimmed (3.653%).
Funding program for 2024
Overall, the 2024 funding strategy outlines new financing needs of about 55 billion euros for the year, representing a reduction of around 10 billion euros from 2023. The gross issuance is expected to reach about 257.572 billion euros, a bit over 2% higher than 2023 due to higher amortizations, with the bulk financed through medium- and long-term instruments to maintain an average debt life.
As part of its 2024 plan, the Treasury intends to rely again on syndications for issuing certain Government Bond references. Other goals include maintaining investor base diversification and issuing green bonds as a structural element of the funding program, reinforcing the market for sustainable finance.
These steps come as the Treasury keeps steering the debt market toward longer maturities and broader investor participation, while balancing funding needs with affordable financing for the state.