In letters with a duration of 3 months, the requests have increased by more than four times the amount finally granted
The hunger for treasury bills has not yet passed its peak. The organization led by Carlos Cuerpo went back to the market this Tuesday, aware of the strong interest of individuals to invest in a more than safe asset that, moreover, currently practically triples the profitability of bank deposits.
And the response is as expected. The Treasury placed a total of 1,959 million euros in three- and nine-month bills with a demand that exceeded and exceeded what was offered, with a higher yield than that of the previous auction for the same maturity, held in January.
In concrete terms, the Treasury granted 508 million euros in three-month bills, compared to the 2,204 million requested. In other words, demand has multiplied supply by more than four, with an average interest rate of 2.494%, above the 2.18% of the previous auction. The marginal rate was 2.52%, also higher than the previous rate’s 2.198% for the same term.
More impressive was the result of the auction of 9-month paper, in which the Treasury placed a total of 1,450 million euros against a demand of 4,161.11 million euros. The average interest rate was 2.938%, compared to 2.830% at the previous auction. For its part, the marginal rate stood at 2.973%, also higher than the previous 2.839%.
Surprisingly, especially for this short term, it already offers a yield comparable to that of one-year bills, the main asset so far, which reached 2.983% in the last auction.
These record interest rates have led individual investors to spend weeks devouring these assets as they provide a safe and much more profitable alternative to their traditional savings formula: bank deposits.
At present, financial institutions are refusing to improve the remuneration of their customers’ savings. For this reason, more and more individuals are signing up for Treasury auctions. According to data from the organization, more than 1,100 million euros have been spent so far this year on purchases through its website alone, to which must be added what citizens buy through their banks or directly from the Bank of Spain, where you already have to make an appointment requests for the avalanche of requests.
To get an idea of the unstoppable growth in demand: just a year ago, purchases from retailers barely exceeded 16 million euros. At the end of last year, they already amounted to 950 million, according to Treasury statistics, with data from the end of November. In any case, and with these official figures, individuals represent only 1.26% of total holders (only of bills, not all of the national debt), although their weight has increased significantly from 0.02% in early 2022.
If only bills of exchange are taken into account, the ECB, through the Bank of Spain, is one of the few to have reduced the acquired volumes, from 6,211 million in January 2022 to 3,523 in November. The most recent data available shows that the agency’s weight in total bills issued by the Treasury has fallen from 7.8% to 4.3%.
A decline that would offset domestic banking, with figures also growing strongly from EUR 8,502 million in January 2022, when they accounted for 10.7% of the total, to EUR 14,416 million (19.04%). The increase is also noticeable in the segment of non-financial companies, which moved from 0.32% of treasury certificates with 253 million euros to a participation of 1.90% (1,437 million euros in November).
In any case, the greatest weight continues to be borne by foreign investors, who currently account for 58.9% of the total, with 44,594 million euros. The figure has dropped significantly from 70% at the beginning of 2022 (55,552 million). Keep in mind, however, that these stats only cover short-term debt. In bonds and bonds, its presence continues to grow month after month.
Exactly, this Thursday the Treasury will go back to the markets to place between 5,500 and 6,500 million euros in bonds. We will have to wait for the outcome of the auction to see who and how much continues to bet on Spain’s sovereign debt.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
