There are some items of Spanish public debt which are eliminated from Bank of Spain’s accounts, reducing the total figure. In other words, 450 billion euros ignored. Basically, what is being removed is public companies’ debt, the debt issued by a public institution in the hands of another public institution, as well as other adjustments, which really should not be discounted.
Miguel Ángel Tramullas | Investment in public debt has traditionally been one of the most popular fixed income assets with both retail and institutional investors. It’s considered as a safe-haven. But in the last few years, it has lost part of its attraction because of lower interest rates which in some places are now in negative territory. To protect themselves, many countries like the US, Japan, the UK, France, Italy and also Spain have begun to issue inflation-linked bonds.
The impact of Brexit on the markets has gone through different stages. There was the initial upheaval in the wake of the referendum result, which had its maximum effect on June 24 when the Ibex recorded its biggest ever fall. And now the stock market and European public debt yields have recovered to pre-Brexit levels.
Investors’ fears and their hunt for safe haven assets are having an unsuspected impact on European public debt yields: nearly two thirds of these securities are in negative territory; the German bund is beating a new record low on a daily basis and Spanish debt is approaching the minimum levels recorded in April 2015.
Spain’s public debt stood at 1.070 trillion euros in the fourth quarter, 7.562 billion euros more than in the previous one, according to Bank of Spain data. (datos del Banco de España).
Spain’s political debate is going on between two irreconcilable adversaries, each one with its own issues. Meanwhile, in the back room where the accounts are done, there is hard work going on to refinance the public and private debt which matures every day. Without some tailwinds, Spain (BBB) could once again find itself facing serious problems.
The figures in Spain are stubborn and worrying. Public debt will exceed 100% of GDP in 2016 and the deficit is not keeping pace with commited goals. So Spain’s public finances are a potential source of future instability, which the country cannot permit given that its external debt is close to 170% of GDP.
Spain’s public debt stood at 1.062.472 trillion euros at the end of September, representing 99.4% of GDP, and compared with the government’s full-year 2015 target of 98.7%. But is this debt burden really so heavy, when the average cost of debt stood at 0.87% at the end of October, compared with 1.52% in December 2014?
Spanish public administration debt fell by €12.7 billion in July to €1.040 trillion
The Corner | July 21, 2015 | Spain’s total public administration debt stood at €1.040 trillion at end-May, up €7.890 billion from a month earlier and representing approximately 97.4% of gross domestic product (GDP), according to the Bank of Spain. The government expects public debt to reach 98.9% of GDP in 2015.