The Treasury has managed to lower the cost of 12-month Treasury bills for the first time so far this year thanks to strong demand and market forecasts that the ECB will not continue raising interest rates much further after reaching 4.25%.
According to data from the Bank of Spain, the auction scheduled for today has closed with the placement of 4,838 million euros in bills, of which most, 3,825 million, correspond to twelve-month bills and the rest, just over 1,000 million, six months. The objective of issuing between 4,000 and 5,000 million euros has been met.
The novelty is that the twelve-month bills, which are the ones that private investors like the most, will yield 3.68%, compared to 3.8% in the previous auction. They are moving away from 4% after having reached their highest level in more than a decade, thanks in part to the fact that they have received a demand 1.7 times higher than the supply.
On the other hand, six-month bills have become more expensive, going from 3.62% in the previous auction to 3.66% in the current one. The profitability of this six-month debt is already very similar to that of twelve months, so that investors are now betting on greater stability in the market and, therefore, on a slight convergence in the different terms at which it is placed . It is an indication that, in his view, ECB interest rates will not go much higher.
The non-competitive orders, which are those that the Treasury generally attributes to individuals when presented on the web at a fixed price, have been equivalent to 1,335 million euros. The total demand has been 9,365 million euros, which shows a decline in the interest of individuals, who came months ago to monopolize 40% of the emissions.
Part of this lower interest is due to the fact that the gap between the profitability of bills and that of deposits is gradually narrowing. Banks rewarded savings at an average of 2.22% in June, compared to 1.4% two months earlier, and are beginning to make an effort to attract money from customers due in part to the reduction in liquidity in the system after the repayment of special ECB loans during the pandemic.
Today's was the only auction this month for six- and twelve-month bills. On August 16 there will be another, bills of three and nine months. The Treasury has scheduled net debt issuances for 70,000 million euros throughout this year.
