Spain Treasury Launches First 20-year Syndicated Bond As It Continues To Finance Covid-19 Crisis Needs

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On Tuesday, the Treasury launched its first 20-year syndicated bond for a minimum amount of 10 billion euros, with demand reaching 78 billion. So it continues to advance in its programme of issues for 2020. This was revised upwards by 100 billion euros in view of the major financing needs arising from the Covid-19 crisis. This is the first time this type of reference has been launched in Spain, as confirmed to Europa Press.

This is the third time during the pandemic that the Treasury has made a syndicated issue. On March 24th it made a syndicated placement for 10 billion euros with a 7-year bond, and another on April 22nd for 15 billion with a 10-year syndicated bond.

On Tuesday, it placed 6.885.81 billion euros in 6- and 12-month bills, close to the top range of 7 billion. It also significantly reduced the cost of issue by deepening the negative rates in both references, while registering demand of 17.751.5 billion euros.

The organisation has successfully carried out the last issues held, reducing in most cases the costs of issue. This is in spite of the crisis and the increase in interest on placements made in its first stage, due to the rise in indebtedness. In fact, the cost of outstanding debt fell by 2% in the last issue, marking a record low, according to the Ministry of Economic Affairs and Digital Transformation.

The Covid-19 crisis has raised the deficit and public debt forecasts for 2020 to historical levels of 10.34% of GDP in the former and 115.5% of GDP in the latter, significantly increasing financing needs.

As a result, the Treasury announced on 21 May a modification of its financing programme for this year. This envisages raising net issuance by 97.5 billion euros to a total of 130 billion, and increasing gross issuance by just over 100 billion euros to 297 billion.

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