On Tuesday, the Spanish Public Treasury tapped the market with 2,031.52 million euros in a new auction of three- and nine-month Letras, aligning with the mid-range expectations and accompanied by a reduction in the yields offered on both maturities. The figures come from data published by the Bank of Spain.
Ahead of this result, investor demand remained strong for Spanish debt, approaching 5 billion euros, more than double the amount ultimately awarded in the auctions.
Specifically, the government entity backed by the Ministry of Economy sold 743.21 million euros in the three-month Letras, against orders totaling 1,688 million euros. The marginal yield settled at 3.325%, the lowest of the year and below the 3.400% seen in the previous month’s auction.
Similarly, 1,288.31 million euros were issued in the nine-month Letras, with incoming bids of 3,103 million euros. The marginal yield declined to 3.419%, another annual low, compared with 3.500% in the prior nine-month issue.
Following Tuesday’s auction, the Treasury will return to debt market activity on Thursday, July 18, with the issuance of government bonds and bills that will finish the month. This release will coincide with a forthcoming European Central Bank policy meeting, although no rate cuts are anticipated at that gathering.
Programme of the Treasury
Collectively, the 2024 financing plan contemplates net funding needs around 55 billion euros for the year, a reduction of roughly 10 billion euros versus 2023.
The gross issuance is expected to reach 257.572 billion euros, about 2% higher than in 2023 due to higher amortizations. The bulk of funding will come from medium- and long-term instruments to keep the average life of the public debt portfolio.
Within the 2024 strategy, the Treasury plans to rely again on syndications for certain references of State Bonds.
Other goals for 2024 include maintaining investor base diversification and expanding the issuance of green bonds as a structural element of the financing programme, thereby strengthening the sustainable finance market.
Notes: Figures reflect the latest official data and are cited for context. [Source: Banco de España].