The Spanish risk premium went down by 73% from 650 basis points in July of 2012 to current 171 regarding the reference German bonds. Draghi’s promise to do whatever needed to preserve the euro has made this climbing possible. These figures almost duplicate the 93 basis points that Spain’s sovereign debt registered at the end of the nineties when the common currency began moving in European markets, but they are also an outstanding milestone given the hard times it has been suffering for last two years.
All the information coming from the Spanish public Treasury should be taken cautiously since cloudy skies in the euro area’s economy are not clear enough yet, but the data appear to be more than optimistic.
Between April of 1997 and December of 1998, foreign investors acquired Spanish debt in seven consecutive quarters without a break and continuous descents in yields. In its effort to converge to euro’s standards, usual Spain’s double digit interest rates cut by 45%. They moved from 7.25 to 3.96%. The Spanish public debt is now about to close another seven quarters as preference investment in international markets. Its interest rates reduced by near 50%.
Furthermore, new Spanish debt’s issues stand at 2.1% cost since the beginning of 2014, which is the lowest rate in Spain’s public Treasury’s history. It also holds a longer average maturity of 8.3 years against 7.3 of 2013 or 5.2 of 2012. According to the country’s Secretary of Treasury Iñigo Fernández de la Mesa, the institution’s main goal is to mimimize costs and extend maturities, With this aim, they are to consider longer term new issuing formulas such as 15 and 30 years bonds, or even 50 after receiving interest and demand from several pension funds and foreign insurance companies.
2014’s Spanish debt sellings go very quickly as they have already achieved 33% of the whole year needs and moved to a more advance pace of its European counterparts. In fact, foreign investors from all the five continents currently control 42% of national debt.
Finally, the Treasury’s roadshow reached European places such as Amsterdam, London, Paris, Frankfurt or Milan and arrived to Latin America for the first time. They have also visited China, Japan and New York City, and will come to U.S. East Coast, Mexico and Nordic countries.