Spanish Treasury 1, Standard&Poor’s 0: the game goes on

By Tania Suárez, in Madrid | Spain’s bill auction on Tuesday has been another success for the sixth time in a row. This time, the Spanish Treasury has placed €2,506.8mn in Treasury bills at 3 and 6 months and so, beats its target of €2,500mn. The yields have fallen almost half a point compared to December’s results.

Specifically, the Treasury has sold €1.43bn of the €6.053,85mn demanded by investors in bills at 3 months. The average interest rate has gone down from 1,735% of last auction to 1,285% whereas the marginal interest has gone to 1,330% versus the 1,880% of the December auction. Also, the Treasury has placed €1,106.80mn of the €7,600,34mn demanded in bills at 6 months. In this case, the average interest rate has fallen to 1,847% from the previous 2,435%, while the marginal rate has gone from 2,530% to 1,900%.

This is the sixth auction in a row in which the Spanish Treasury has reduced the yields it has to pay to the investors, so that it’s cheaper for Spain to be financed and not to loose its ‘appeal’. Furthermore, many analysts highlight the large demand from markets. In fact, Julián Benavente –analyst for CM Capital Market, says

“investors have demanded more than €6bn in Treasury bills at 3 months and almost €7.6bn at 6 months.”

By now, the Spanish Treasury has sold €23.99bn, almost the whole target of bills, bonds and obligations for 1Q12. For the rest of this year, the remaining amount would be €121,734mn. Some analysts think that this brilliant behaviour of the Spanish debt sale is due to the intervention of the ECB; others, by contrast, believe it’s because some think things could go worse… What holds true is that Spain’s Treasury auctions have been a smash hit despite the downgrading of S&P.