Spanish Treasury seduces investors, yields fall under 1%

By Tania Suárez, in Madrid | The Spanish Treasury keeps reducing the yield of its public auctions and demand keeps increasing: 5.9 times the offer (almost €15bn). Just a few hours after Europe has given the green light to Greece’s rescue package, the Spanish Treasury has sold €2,5bn –the maximum expected, at 3 and 6 months bills, and thus, it has reached the high end of the target range.

Specifically, it has sold €1,736.42mn of the €7,007.95mn demanded by investors in bills at 3 months. The average interest rate for this type of bill has gone down from 1.285% to 0.396%, whereas the marginal interest has fallen to 0.440% vs. the previous 1.330%. On the other hand, the Spanish Treasury has placed €764mn in 6 months bills, with an excess demand of 10.24 times (vs. 6.9 times reached last auction on January). In this case, the average interest rate has gone down to 0.779% vs. the previous 1.847%, and the marginal interest fell to 0.780% versus 1.900% of the January 24 auction.

The Spanish Treasury has already issued more than €33bn so far this year, which involves more than 38% of €86bn gross issuance that Spain expects to place in the medium and long term throughout 2012. Net issuance will be €36bn vs. €48bn in 2011.

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