The participation of Spanish banks in Treasury issues increased by 26,000 million in 2022, reaching 166,208 million euros, to the detriment of the purchases of Spanish public debt made by the European Central Bank (ECB), according to the figures provided today by the Secretary General of the Treasury, Carlos Cuerpo.
The Secretary General of the Treasury highlighted, at a press conference to present the balance of public financing for 2022 and the strategy for 2023, that during the last year there has been an increase in the participation of domestic banks, a situation contrary to the that had been registered after the financial crisis, when the ECB began to buy debt in the face of the reduction of the participation of resident investors.
In this way, the current participation of credit institutions in the Spanish public debt stands at 13%, while that of the ECB stands at 33% of the ‘stock’ of outstanding debt. In addition, Cuerpo has highlighted the holding by foreign investors, which would be around 41% of the debt, a situation that is already registered in the two large economies of the EU, such as France and Germany.
In this sense, Cuerpo has highlighted the effort made by the Treasury to diversify the investment base, as well as the “solid position” of the portfolio that has allowed foreign investors to maintain confidence, despite the complex macroeconomic environment and the normalization of interest rates by the ECB.
The Secretary General of the Treasury recalled during his presentation that the gross issuance for 2023 will be around 256,930 million euros, which represents an increase of 10% compared to the estimate for this year, due to the rise in interest rates .
For its part, the net debt will be 70,000 million euros. For the third consecutive year and with the objective of maintaining the average life of the public debt at around eight, all the net financing will be obtained through the issuance of medium and long-term instruments, which will amount to 75,000 million, corresponding to a gross issuance of 172,521 million euros.
For its part, the gross issuance of Treasury Bills will be 84,325 million euros, a lower volume than those that mature in the year, resulting in a negative net issuance of Letras of 5,000 million.
The net emissions figure is in line with that registered in 2022, after the forecast for 2022 was revised downward from 75,000 to 70,000 million euros thanks to the good performance of the Spanish economy during the past year and the “robust” working market.
The Treasury plans to concentrate two thirds of the issues during the first half of the year, as it has already done in recent years, as part of its “prudent” management and with the aim of maintaining confidence and contact with investors. “The element of stability in this highly uncertain context is accompanied by extra flexibility and prudence to accompany the strategy as a whole,” explained Cuerpo.
INCREASE IN THE COST OF ISSUE
In this regard, the Secretary General of the Treasury has highlighted that the financing strategy for 2023 will be developed in a different context, mainly due to the completion of the net sovereign debt purchase programs by the ECB and the gradual reduction of reinvestments, which They join the normalization of monetary policy being carried out by central banks to reduce inflation.
Due to this situation of normalization of monetary policy, the Treasury foresees an increase in the costs of issues and the average cost of debt, albeit moderately and “very cushioned” by the lengthening of the average life of the debt , which currently stands at around eight years.
THE CURRENT COST OF DEBT IS 1.73%
It should be noted that despite the 250 basis point increase in official interest rates, the cost of the total Spanish debt as a whole has increased “only” by nine basis points, to 1.73%, while the average cost of the debt issued in 2022 stood at 1.35%.
In addition, Cuerpo has also indicated its forecast that the average life of the Spanish public debt will remain around eight years during 2023, with a preference for medium and long-term instruments, compared to bills, in such a way that continue the reduced risk of refinancing.
AROUND 3,000 MILLION EUROS IN ‘GREEN’ BONDS
The Treasury has also advanced its forecast of placing around 3,000 million euros in ‘green’ bonds in 2023 through three issues, in line with the amount of operations carried out in 2022. To date, Spain has placed in the market 8,200 million euros in ‘green’ bonds and has a forecast of putting around 20,000 million into circulation.
With regard to regular issues of Treasury securities, 48 ordinary auctions of Bills and Bonds and State Obligations are planned. In 2023, the Treasury will again resort to bank syndications for the issuance of certain references of State Obligations.
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