The Treasury opens July issues next week with auctions of bills and State obligations

The improvement in interest rates, in line with the latest ECB rate hikes, has maintained investor appetite.

The Treasury opens July issues next week with auctions of bills and State obligations

The improvement in interest rates, in line with the latest ECB rate hikes, has maintained investor appetite


The Public Treasury will auction next week 6 and 12-month bills, in addition to State obligations, thus opening the issues corresponding to the month of July, according to the calendar of the department under the Ministry of Economic Affairs and Digital Transformation.

Specifically, the Treasury will auction six- and twelve-month bills on Tuesday, while on Thursday it will issue 4 different references to government bonds and obligations.

In the last issuance of six and twelve-month bills on June 6, the Treasury placed 4,964 million euros with a marginal interest of 3.392% in six-month bills and 3.468% in twelve-month bills.

The improvement in the interest rates offered, in line with the latest increases in interest rates by the ECB, has maintained the investor appetite of the markets for Spanish bonds. Private investors are showing great interest in buying debt, mainly in the short term, given its high profitability, which has been growing since the beginning of 2022, especially in the case of shorter-term bills.

All this in a context in which the Governing Council of the European Central Bank (ECB) decided two weeks ago to raise interest rates by 25 basis points, as the market consensus took for granted, so that the interest rate The reference rate for its refinancing operations has stood at 4%, while the deposit rate has already reached 3.50% and that of the loan facility is 4.25%.

For its part, the United States Federal Reserve (Fed) unanimously decided to keep interest rates in the target range of between 5% and 5.25% after the ten increases undertaken since March 2022.

But ECB President Christine Lagarde warned earlier this week that inflation in the euro zone is too high and will remain so for too long, saying it is "unlikely" that rates can be declared in the near future. of interest have peaked.

After the first auction of the month, the Treasury will return to the market on Thursday with an issue of government bonds. Specifically, it will auction government bonds indexed to inflation with a residual life of 4 years 5 months and a coupon of 0.65%; 7-year State bonds, with a 0.80% coupon; 10-year State bonds, with a 3.55% coupon and 50-year State bonds, with a 1.45% coupon.

With a view to this auction, in the last issuances of these references, the marginal interest stood at 0.671% for inflation-indexed government bonds with a residual life of 4 years 5 months; at 3.082% for 7-year State obligations; at 3.556% for 10-year State obligations and at 2.889% for 50-year State obligations.

After these auctions, the Treasury will return to the debt markets on July 11 with an auction for three- and nine-month bills and another on July 20 for government bonds and obligations.

Last month's auctions were marked by the launch of a new 10-year syndicated bond maturing on October 31, 2033. The Treasury issued 13,000 million in the auction and received a demand for more than 85,133 million euros, one of the highest recorded by the organization in its history.

The bond issued last Wednesday matures on October 31, 2033 and has a coupon of 3.55%. The yield has been located at 3.556%, equivalent to 10 basis points above the current 10-year reference, with a shorter maturity in April 2033.

The Department headed by Nadia Calviño has emphasized that this issue reflects the "confidence" of investors in the development and evolution of the Spanish economy, which is also shown in the "positive evolution" of the Spanish risk premium, which has dropped in recent days and stands below 100 basis points.

The gross issuance by the Public Treasury will be 256,930 million euros this year, which represents an increase of 8.2% compared to the estimate for 2022, due to the rise in interest rates.

For its part, the net indebtedness of the Public Treasury in 2023 will remain at 70,000 million. Breaking down by type of instrument, the Treasury Bills are expected to provide net negative financing of 5,000 million, so the State bonds and obligations, together with the rest of the debts in euros and foreign currency, will contribute the remaining 75,000 million.