Non-resident investors net buyers of long-term Spanish debt after ECB support

Follow the money, that is what foreign investors did while rearranging their Spanish debt holdings in August: €7.17 billion in up to 36-month T-bills dumped, €3.1 billion in government bonds and debentures with increasingly higher yields purchased.

The figures the Bank of Spain published on Tuesday are the first records released after the European Central Bank offered buying unlimited quantities of short-term sovereign bonds–which will come into effect when a euro zone country sees market access bringing unsustainable prices and it officially asks for a bailout. Spain is expected to fit in both assumptions.

Non-resident owners of Spanish debt cut down the exposure to T-bills in a higher rate that outstanding government short-term paper reduction, with repayments surpassing gross issues by over €1.2 billion. Resident investors incremented purchases, particularly banks with a €4.9 billion rise.

But outstanding medium and long-term debt grew in August by €3.5 billion, and some 90 percent of it went into foreign buyers’ hands.

The overall picture shows that foreign investors retained less Spanish debt with their portfolios selling some €4 billion, while the resident sector became net buyer with €6.4 billion.

What analysts in Madrid point out, though, is that non-resident holdings fell slightly by 0.8 percentage points to 30.1 percent and chose to pile up Spanish public debt with profitable returns, even if with five or 10-year maturities. It could be the case that the “Spanish risk” doesn’t scare much, lately.