The Spanish Treasury held its first syndicated issue of this year on Wednesday. It is a placement of securities with a maturity of ten years with which 10,000 million have been captured. Initial demand has been very high, setting a record of 130,000 million euros. In view of this great appetite of investors, the Treasury has chosen to lower the spread (the interest remuneration to investors) from eight to four basis points over the current ten-year reference. In this way, although the final demand has been reduced to 56,600 million euros (more than five times the volume placed), the issuing institute has managed to lower the cost of the issue. In addition, that demand is greater than that registered in the last ten-year bond issued in January 2020, before the start of the crisis caused by the pandemic.
The new ten-year benchmark has been issued with a 0.10% coupon and a 0.114% yield, the historic low for a Treasury syndication for that term. Expiration will take place on April 30, 2031.
The Ministry of Economic Affairs highlights that the demand has been of “very high quality”, with a participation of non-resident investors that has exceeded 79% of the total issue, “which shows the confidence of investors in the Spanish economy ».
Regarding the type of investment, the largest participation corresponded to fund managers, with 44.6%, followed by bank treasuries, with 20.8%, insurance companies and pension funds, with 15.8%, and other banking services, with 6.3%. Central banks and official institutions have participated with 6.3%.
On the day of this Wednesday, coinciding with the operation, the yield of the Spanish ten-year bond fell from levels above 0.10% on Tuesday to 0.07%. But it was a global move (the 10-year yield on the US bond also fell from 1.15% to 1.10%). The risk premium in Spain, however, did increase slightly in the session, reaching almost 60 basis points.
With this operation, the Treasury advances in its financing strategy for the year, which it updated last week. It has already raised a total of 22,999 million euros, at a negative cost of -0.08%.
The agency plans to carry out net issues worth 100,000 million euros, a figure lower than that of 2020, when the volume was close to 110,000 million (this figure coincided with the collection in the Budgets for this year, but it was revised at the fall by 10,000 million due to the good evolution of tax revenues). In addition, the planned gross issuance will amount to about 290,000 million euros, above, this time, the 277,059 million euros in 2020.
Last year the Treasury also resorted to syndicated issues. Specifically, a nominal volume of 51,662 million euros was issued in a total of five operations.
In 2020, the average cost of new issues stood at 0.18%. And the average cost of outstanding debt fell to 1.86%. With the new operation, this last cost has set a new historical low at 1.83%.