The Treasury pays the highest interest since 2012 to place its bills


Investor interest in Spanish debt is maintained during an auction with the agency paying 3% on its six- and 12-month debt

Strong demand from investors, but at a higher cost to the state. The trend that the debt market had set in recent months – mainly as a result of the start of interest rate hikes by the European Central Bank (ECB) – continues at the beginning of the new year.

On Tuesday, the Treasury faced its first litmus test with a short-term debt issuance (six-month and twelve-month bills) in which it managed to raise 4,893 million euros, in line with the expected bandwidth and with strong demand. highest, 9,793 million euros. However, financing costs have increased significantly. In particular to maximums since 2012.

Specifically, the agency under the Ministry of Economy has placed 3,293 million euros in 12-month bills, responding to a demand that doubled the offer, with more than 7,000 million requested by investors, and a marginal rate of 2.998%. This offered yield is well above the 2.474% of the previous auction for the same duration and is the highest since August 2012.

In six-month bills, interest was posted at 2.599%, compared to 2.092% in the previous auction, also the highest level since July 2012.

In 12-month bills, the Treasury has placed 3,923.35 million, below the 7,077.80 million requested by investors, with a marginal return of 2.998%, higher than the previous 2.474%. This returns it to the highest levels since August 2012.

In this context of rising interest rates, the Treasury has yet to update its strategy for 2023. However, the general state budget for this year expects an increase of more than 8% in the volume of gross issues, which are expected to reach 256,930. million euros.

In this environment, and while the impact of the rate hike could be partially offset by the more expensive bonds issued years ago and now maturing, the organization led by Carlos Cuerpo is aware that it will have to adopt in the coming months a higher expense for this concept.

This Tuesday’s issuance has not been reflected in the behavior of the Spanish equity market, which remains broadly flat after a very optimistic start to the year.

Investors remain cautious in sessions with few macroeconomic references and the Ibex is hesitant to attack 8,700 points. The largest decreases were recorded by Colonial (-1.48%), Acerinox (-1.26%), Amadeus (-1.22%), ArcelorMittal (-1.17%) and ACS (-1.16%) , while on the other hand Solaria (+2.76%), Acciona (+1.80%), Unicaja Banco (+1.60%), Acciona Energía (+1.41%) and Naturgy (+1.28 %).

Unless investors get a positive surprise, no major moves are expected until next Thursday when US inflation data for December is released.

According to Link Securities analysts, this figure will have “a strong impact, for better or for worse, on the stock and bond markets,” especially at a time when the Federal Reserve (Fed) is sticking to its message that it will continue to cut interest rates. to increase. albeit perhaps in a more moderate way in 2023.

Traders are also awaiting the start of corporate earnings season on Wall Street, with major financials reporting to the market this Friday. Analysts expect members of the S&P 500 to present a 4% year-over-year drop in their earnings this season, which will see Q4 2022 data released. If confirmed, it would be the first quarter recorded in this market since the worst phase of the pandemic in 2020.

Source: La Verdad


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