The Spanish Treasury completes the first 2025 bond auction with strong demand and varied maturities
The national treasury conducted its first debt auction of the year, issuing a total of 6,891.8 million euros in new securities, a figure just shy of the annual target for the first operation. Demand from investors reached 11.362 billion euros, signaling a robust appetite for government securities among domestic and international buyers, even as the final allocation did not fully match the peak demand.
This auction marked the Treasury’s first issue since appointing a new economy and finance leadership. It priced a benchmark three-year bond with a coupon of 2.50% and a maturity date of May 31, 2027; a five-year issue with a 3.50% coupon maturing May 31, 2029; and a long-dated 30-year debt with a 1.90% coupon maturing October 31, 2052. An inflation-indexed issue with a 0.65% coupon and a remaining life of just under four years was also offered to diversify the debt mix.
In the three-year reference, the Treasury faced a demand of 3,694 million euros against a 2,679.1 million issuance, with a marginal rate just under 2.592%. This result sits below the 3.249% marginal rate recorded at the last reopening in this cycle, reflecting market movements and the overall rate environment.
Similarly, the five-year notes attracted 2,155.7 million euros of demand, slightly above the offered amount of 3.586 million. The marginal profitability ended up at 2.628%, a touch lower than the 3.339% rate seen in the previous auction, illustrating the shifting yield landscape in mid- to long-term maturity segments.
The 30-year portion saw bidding of about 1,457.7 million euros against a completion target near 2.0 billion euros. The reported marginal yield of 3.698% remained lower than the 4.473% hit in the prior auction, underscoring a softening in ultra-long yields historically seen during the year’s first issue.
Inflation-indexed securities drew 599.19 million euros in demand, roughly tripling the prior offer of 1,564.19 million euros, with a marginal profitability of 0.836%, down slightly from 0.879% in the previous auction. The goal for this line was to attract between 250 and 750 million euros, and the final bid exceeded the minimum target by a comfortable margin, reflecting strong investor interest in inflation-linked protection.
The Ministry of Economy reported a continued decline in debt yields, noting that the 10-year benchmark is trading around 3.05%, about a full percentage point below the October highs. That trend helps explain the favorable reception of the new issues as investors balance growth expectations against inflation and fiscal consolidation objectives.
The year’s first bond issue also set the tone for the upcoming schedule, with the next auction window on January 9 focusing on six- and twelve-month bills as part of the ongoing funding plan for 2025.
Concluding 2023, the Treasury achieved a net issuance of 65 billion euros, a reduction of around 5 billion from the initial forecast. This outcome reflected solid demand and a resilient Spanish economy, with gross issuance totaling around 252 billion euros for the year, according to the Economy Ministry.
The government highlighted that financing programs were completed with strong investor confidence across all issues, despite a challenging global context. Net issuance for the year aligned with the objective to reduce the budget deficit and the debt-to-GDP ratio. The latest projections show the debt-to-GDP ratio easing to 108.1% in 2023 and to 106.3% in 2024, signaling a path toward improved fiscal health after a peak in 2021.
Overall, market participants welcomed the Treasury’s approach to diversifying its debt portfolio while managing yields and funding needs. The combination of short, medium, and long-dated instruments offers investors a balanced mix of protection against inflation and opportunities for income in a landscape shaped by macroeconomic uncertainty and gradual rate normalization [citation needed].