Public Treasury on Tuesday disclosed an issue of 1,795.6 million euros, reported in letter form for three and nine months, falling below the average market expectations. Investors received lower yields at the three month mark and faced a negative return at nine months, according to data from the Bank of Spain.
The joint bid for the two reference securities offered at auction on Tuesday exceeded 4.1 billion euros, more than double what markets had anticipated by the close of trading.
Specifically, the agency affiliated with the Ministry of Economy placed 364.10 million euros in three‑month bills against a demand of 1,649 million. The marginal rate stood at -0.350 percent, which is less negative than the -0.478 percent recorded for the same title last May.
The Treasury also placed 1,431.50 million euros in nine‑month bonds alongside six‑month notes, with investors bidding 2,481 million. In this case, the marginal return was 0.660 percent, compared with the negative -0.081 percent on the prior issue.
Recent auctions have seen the Treasury paying investors higher yields on debt securities, driven by rate adjustments from the Federal Reserve and the European Central Bank’s early statements in July. As a result, the yield on the Spanish ten‑year bond rose to 2.984 percent on Tuesday, while the risk premium climbed above 130 basis points for the first time since May 2020, signaling renewed inflationary concerns and shifting risk assessments. [citation from market data providers]
Following this auction, the Ministry of Economy and Digital Transformation will assess the market environment and plan its next move. The department is preparing to return to the markets on Thursday, June 16, with a long‑term debt issue intended to close the month’s financing operations. [official schedule cited by treasury records]
In particular, the Treasury will offer government bonds with a five‑year maturity and a zero percent coupon, expiring January 31, 2027; bonds with an eight years and one month remaining to maturity, carrying a 1.95 percent coupon and maturing July 30, 2030; and a 15‑year bond with a 0.85 percent coupon maturing July 30, 2037. [official documentation]
financing program
The June agenda includes a notable event announced on June 7, when the Treasury launched an eight‑billion‑euro ten‑year syndicated bond. The issue attracted a strong demand of 40,955 million euros and reflected healthy investor appetite for long‑term Spanish debt. [issuer press release]
With this syndication, the Treasury covered about 57.6 percent of the medium and long‑term financing program. Total financing costs so far this year averaged 0.71 percent, and the average life of outstanding government debt now sits at 8.11 years, reducing refinancing risk compared with late 2021. [market analysis]
Additionally, studies conducted by the Treasury in recent years show that low financing costs support a continued decline in the debt stock’s cost, projecting a rate of 1.59 percent in 2022, a modest decrease from 1.64 percent at the end of the prior year. [economic outlook]
In line with its financing strategy, the Public Treasury maintains a target net debt issuance of 75,000 million euros for 2022. Gross issuance is expected to fall around 10 percent to 237,498 million euros compared with the previous year, remaining broadly in line with the 2021 level of 75,138 million. Most of the anticipated gross issuance remains focused on Treasury bills and longer‑term securities. [annual plan]
As of July, the issuance landscape is expected to shift as the European Central Bank Governing Council announces its own net purchases for the public asset purchase program, which is scheduled to expire in July. A 25 basis point rate increase is also anticipated in the same month. [ECB policy update]