Since last August, it was already difficult for investors to ensure a return of 3%, but now scratching 2.50% is also difficult for them. The 12-month Treasury Bills are already trading below this level in the secondary market (where the securities are bought and sold once issued): this Thursday they went to 2.48%, the lowest interest since December 2022.
The panorama of returns that the most cautious profiles can pocket has changed a lot, those who invest the most in Letters, who for many months (almost all of 2023 and until August 2024) had been enjoying guaranteed returns of 3% or more with the securities. 12-month Treasury. It cannot be forgotten that just over a year ago, In September 2023, investors earned 3.93% for lending their money to the Kingdom of Spain for only one year (for doing so for a decade they earned little more, 4%). But those returns to which these profiles had become accustomed are over. If they want to recover them, they will have to look at other products, such as deposits or fixed income funds (although this last option implies taking on more risk and, therefore, changing the investor’s profile).
This downward trend in yields reflected in the secondary market is the same as that observed in the auctions held each month by the Treasury. In fact, since last June, investors who have had to renew their Letters have done so, systematically, at lower rates than those they had previously enjoyed. It is true that in the last auction, on November 5, profitability rose for the first time in 8 months (up to 2.61%), after months of falling sharply. But the prevailing trend is that the interest that the State will have to pay in auctions continues to decline, and that renewing the Bills at higher rates is an impossible mission.
This movement, and the one reflected in the secondary, is in line with the path of rate cuts that the European Central Bank (ECB) began in June, which will continue in the coming months, pulling yields downward. The market expects practically six more cuts in the price of money between now and October 202525 basis points each.
The investor who wants to continue in Spanish public debt you can still secure 3%, but in exchange for lending their money for a much longer term to the Kingdom of Spain. The yield on the 10-year Spanish bond is currently at 3.08% in the secondary market. This profitability has moved downward in recent months; It reached 3.46 at the beginning of July, and has been declining since then. And, after having lost 3% for much of October, it has now overcome that psychological barrier again.
More profitable 12-month deposits
On the other hand, for those savers who need to renew their Letters, in Spain a good handful of 12-month deposits are for sale that exceed the profitability of the Letters. Cetelem stands out -the division of credit products for individuals of BNP Paribas-, which in recent weeks has raised remuneration up to 3.24% (in a context in which most banks are lowering interest rates). For its part, Banco Finantia maintains its 1-year deposit at 3%, while Pibank has cut it from 3.03% to 2.83%, still exceeding the yield of the Letters.
Last week, EBN revolutionized the sector by launching a combined deposit that offers 3.55% for 12 months. But it is not a typical deposit, since it requires a link in investment funds or managed portfolios. That 3.55% also implies a contribution of at least 60,000 euros; For amounts from 20,000 euros, the APR is 3.25%.
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