This Tuesday, the Spanish Public Treasury placed 5,231.93 million euros in short-term debt, in the expected medium-high range. On this occasion, the agency dependent on the Government (more specifically, the Ministry of Economy, Commerce and Business) has offered less profitability for both six-month and 12-month bills. Investors anticipate that the European Central Bank (ECB) will begin to lower interest rates in the summer, that is, to lower the price of money.
Given the latest data on economic activity and the evolution of inflation (on a decreasing trend) throughout the eurozone, more and more analysts believe that the ECB will begin to relax its monetary policy in June. If so, the institution would carry out the first cut since 2016 in the case of the main refinancing rate. In 2019 the ECB lowered the deposit rate (by clicking here you can check the difference between the three interest rates that the European Central Bank has).
However, the markets’ investor appetite for Spanish debt securities has remained unchanged today. The proof is that the joint demand of both references has almost doubled what was awarded, with requests of 10,328 million euros.
In detail, the Treasury has placed 1,310.10 million euros in one-semester bills, compared to a demand of 3,412.53 million. As for one-year bills, requests from investors have reached 6,915.79 million, but finally 3,921.83 million have been awarded, Europa Press reports.
What is the profitability of Treasury bills?
According to data published by the Bank of Spain (BdE), the marginal interest on half-year bills has softened to 3.623% compared to the 3.715% of the previous issue. The average interest rate has been practically the same (3.621%).
As for 12-month Treasury bills, the marginal yield has dropped to 3.449%, down from 3.516% previously. The average profitability has been 3.423%.
The interests on both types of bills beat the current inflation rate in Spain (3.2% year-on-year in March, according to preliminary data from the National Institute of Statistics). This means that investing in these assets prevents the loss of purchasing power, or in other words, our money losing value.
Although they remain high, marginal returns are far from the maximum levels in a decade achieved at the end of last year, which exceeded 3.8%, Europa Press recalls.
