Three- and nine-month interest also falls after the ECB pause

The investors’ expectation that interest rates will no longer rise more in the eurozone (the 20 countries that use the euro, Spain among them) continues to be noted in the debt issues of the Public Treasury. If you registered last week a drop in interest on six-month and one-year bills, this Tuesday the same thing happened in the auction of three and nine month bills. However, investor demand has once again greatly exceeded the amount placed on the markets: requests have exceeded 4,957 million euros, more than double the amount awarded.

Specifically, the Treasury has today placed a total of 1,976.05 million euros in letters to one and three quarters, in the expected midrangeaccording to data published by the Bank of Spain (BdE).

Individual investors continue to show great interest in purchasing debt, mainly in the short term, given its high profitability, which has been growing since the beginning of 2022. These assets prevent the loss of purchasing powersince the returns they offer exceed the current inflation rate.

In fact, households and private non-profit institutions serving households have gone from having 35 million euros in Treasury bills in August 2022 to 20,348 million in August 2023, becoming the largest holders of this type. of short-term debt, according to the latest data from the BdE.

Key data from the Treasury bill auction

The Public Treasury, dependent on the Government (more specifically, the Ministry of Economic Affairs), has offered a marginal interest for three-month bills of the 3.58%below the 3.59% of the previous October auction, when the highest percentage was reached since November 2011. The average interest rate has been 3.552%.

In nine-month bills the average profitability has been 3.686%. The marginal return has finally been placed at 3.705%being lower than the 3.818% offered in the previous issue, when the highest level recorded was achievedtaking into account that this reference was launched in February 2013.

Why is profitability decreasing?

The auctions that are being held these days are marked by the recent decision of the European Central Bank (ECB) to leave interest rates intact after ten consecutive increases. The ECB began make money more expensive in July 2022 to confront runaway inflation (which at the end of last year reached close to 11% year-on-year compared to the target of around 2% sought by the monetary institution).

He main refinancing type is currently from 4.5% and the deposit rate is 4.75%. Furthermore, although there is a huge division on the matter in the Governing Council of the central entity, some members already dare to date the first rate cut.

Furthermore, the United States Federal Reserve (Fed) has also chosen this month to maintain ratesin its case for the second consecutive time, in the range of 5.25%-5.50%.

When will the next Treasury bill auction be?

This Thursday, November 16, the Treasury plans to place between 4,000 million and 5,000 million euros in an auction that will close this month’s issues. Specifically, it plans to auction three-year State bonds, with a coupon of 2.80%; 10-year State obligations, with a coupon of 3.55%; and 20-year State obligations, with a coupon of 3.45%.

As for the next letter auction, is scheduled for him Tuesday December 5when letters will be placed for six months and one year.