The demand for Treasury bills continues to rise. The public body auctioned again this Tuesday almost 5,000 million euros in bills for six and twelve months, with remuneration for investors with interest above the 3% threshold in both references, according to data published by the Bank of Spain. This interest rate is the highest in the last decade.
The organization led by Carlos Cuerpo is aware of the strong interest of individuals in investing in a safe asset that, in addition, currently practically triples the profitability offered by bank deposits. And the reaction has again been as expected. Specifically, the Treasury has placed a total of 903.74 million euros in six-month bills, with a demand that has tripled the offer (2,720 million) and the marginal interest rate has been placed at 3.164%, its maximum level since 2012, much higher than the almost 2.7% that was the previous auction in February.
In twelve-month bills, the agency has placed 4,034 million euros, below the 5,974 million demanded, with a return of 3.335%, its highest level since 2012, and also above the 2.84% of the auction previous.
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Thus, the demand has exceeded 8,695 million euros, almost double the amount finally awarded. Above all, investors show great interest in buying short-term debt, given its high profitability, which has been growing since the beginning of 2022, especially in the case of shorter-term bills. Investors consider that they are a good safe alternative and much more profitable than their traditional savings formula: bank deposits.
Little return on deposits
At the moment, financial institutions refuse to improve the remuneration of these savings from their clients. For this reason, more and more individuals are signing up for Treasury auctions. According to data from the organization, so far this year more than 1,100 million euros have been spent on purchases only through its website, to which should be added what citizens acquire through the intermediation of their banks or directly in the Bank of Spain, where you already have to request an appointment before the avalanche of requests.
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All this in a context marked by the successive rises in interest rates by both the US Federal Reserve (Fed) and the European Central Bank (ECB). In fact, the last decision taken by the ECB was to raise interest rates by 50 basis points, so that the interest rate for its refinancing operations will be 3%, while the deposit rate will reach 2, 50% and the loan facility 3.25%.
But the high level of underlying inflation in the euro area suggests that it will be necessary to continue raising interest rates beyond the meeting on March 16, as recently pointed out by Philip Lane, ECB executive and chief economist at the institution.
After this Tuesday’s auction, the public body will return to the markets on March 14 with an issuance of 3- and 9-month bills and another of State bonds and obligations on March 16, which will end the auctions for the month.
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