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Home » Auctioning of public treasury bills: profitability and expectations

Auctioning of public treasury bills: profitability and expectations

The Treasury will hold an auction of three- and nine-month bonds on Tuesday, expecting to place between €1,500 million and €2,500 million, according to targets announced by the body under the Ministry of Economy and Digital Transformation.

In the last issuance of three and nine-month bills on June 13, the Treasury placed 2,069 million euros at a marginal rate of 3.263% on three-month bills and 3.490% on nine-month bills.

The improvement in interest rates on offer in line with the ECB’s recent rate hikes has kept investors in the markets interested in Spanish bonds. Retail investors are showing keen interest in buying debt, especially shorter-dated ones, given the high yields that have been accelerating since early 2022, particularly for shorter-dated debt securities.

This has caught the attention of investors who see these Treasury bills as an opportunity to generate attractive yields amid rising European Central Bank (ECB) interest rates. Two weeks ago, the Governing Council decided to raise interest rates by 25 basis points, which has increased investor interest in Spanish securities.

Although the US Federal Reserve (Fed) decided to keep interest rates within their target range, ECB President Christine Lagarde has signaled that inflation in the euro zone will remain too high for a long time, making interest rates unlikely to rise have even peaked It’s almost time.

The auction of public treasury bills is just one example of the organization’s funding strategy for 2023. Treasury’s gross issuance is estimated at €256,930 million this year, an 8.2% increase from the 2022 estimate. This increase is largely due to the rise in interest rates.

Treasury net debt in 2023 is expected to remain at 70,000 million euros. Government bonds are expected to provide negative net funding of €5,000 million, while bonds, government bonds and other debt denominated in euros and currencies will contribute the remaining €75,000 million.

It is important to note that public treasury bill auctioning represents an opportunity for both private and institutional investors. The profitability of these stocks, particularly over the short term, has attracted the attention of investors looking to make a profit as interest rates rise.

Following this auction, the Treasury will return to the debt markets on July 20th with the issuance of government bonds and bonds, thus closing the month of July. This issuance calendar allows the Treasury to diversify its funding sources and maintain a constant presence in the financial markets.

In summary, government bond auctions present an opportunity for investors looking for profitability. The improvement in interest rates on offer and increasing demand for Spanish securities reflect investors’ interest in profits against the backdrop of rising interest rates. The Treasury aims to spend a total of €256,930 million in 2023, showing its funding strategy for this year.

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