After issuing €1,62 bn at 5 years, €1,31bn at 10 years and €510 M at 30 years, the Treasury ruled out any further debt issuances in 2019. On the other hand, the net issuance amounted to almost € 20 bn, the lowest figure since 2007.
From 2019 it is possible that Spain will have difficulties financing its public debt, which is definitely not only the official figure of 98.3% of GDP. Rajoy’s increase of this debt by €649 billion has been financed at very low interest rates, thanks to the ECB’s quantitative easing. On the other hand, Pedro Sánchez has announced substantial spending increases, which will inevitably increase debt in 2019.
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.
UBS | In this report, we focus on three pivotal questions that we consider crucial for investing in any security in Spain: First, what is the economic outlook for 2016/17, and what are the biggest economic policy challenges that the next government will face? Second, what are the likely scenarios for the outcome of the elections on 26 June? And third, what is the valuation and relative attractiveness of Spanish assets, how will asset markets react to different election outcomes, and what is or is not priced in?
The current uncertain political panorama in Spain after the December 20 elections has not been reflected in any significant way in sovereign debt spreads. The yield on the 10-year bond compared with the German bund is around 130 bp, no more than 10-15 bp above the pre-elections level. One alternative to reduce (or diversify) exposure to Spain’s public debt may be take positions in Italian debt.
The Spanish Treasury sold €2.102 billion worth of bonds at its last auction of the year, meeting its issuance target for 2015 of €139 billion. Its average issuing period in 2015 was 9.1 years, not seen since 2010, and it paid an average yield of 0.87%. This has meant that the average cost of debt in circulation has fallen to a record low of 3.16%.
The Corner | May 26, 2015 | The improvement of financial markets in 2014 allowed the issuance average cost of the Spanish public Treasury to go down to 1.46%, about 100 basis points below 2013 levels. Spanish premium risk fell by 114 basis points to reach an average of 120 points in December, according to the Bank of Spain. (Chart above: Spain Generic Govt 10Y Yield; Source: Bloomberg)
MADRID | May 12, 2015 | By Fernando G. Urbaneja | The show of confidence belies an economic weakness: half of Spain’s debt is in the hands of foreign investors. After the uncertainties leading up to the summer of 2012, they are once again stocking up their portfolios with Spanish securities.
MADRID| By Julia Pastor | Spain rocked in debt markets on Tuesday, raising more than €40bn in public and corporate bonds, something that will hopefully underpin the excellent moment of peripheral sovereign debt. In fact, Italy announced a future issuance of 30-year syndicated bonds following the Spanish lead. International investors bought 73% of the Spanish indexed-inflation bonds and 90% and 83% of Telefonica and Bankia’s securities, respectively.
MADRID | By Francisco López | Spanish debt’s low interests in the beginning of the year have resulted in a flood of Treasuries as well as corporate and regional bonds. Just last week, the country’s public Treasury placed more than €8 billion and financed 33% of € 133.3bn foreseen by the end of 2014 in less than three months.