The Spanish Treasury has successfully placed 5,767.57 million euros in its latest auction of 6 and 12-month Treasury Bills, marking a significant reduction in interest rates to levels not seen since 2022. This auction, held on Tuesday, May 6, 2025, reflects the ongoing adjustments in the financial landscape as the European Central Bank (ECB) continues to lower interest rates.
In the auction, the Treasury secured 1,692.28 million euros in 6-month Treasury Bills, attracting a total demand of 4,101.56 million euros. The marginal interest rate for these bills was set at 1.954%, a decrease from the previous auction's rate of 2.119%, and the lowest since October 2022. Similarly, in the 12-month Treasury Bills auction, the Treasury placed 4,075.29 million euros, with demand exceeding 6,233.53 million euros. The interest rate for these bills also fell, from 2.023% to 1.9%, the lowest recorded since September 2022.
Despite the declining profitability of these Treasury Bills, investor interest remains strong. The total demand for both the 6 and 12-month bills surpassed 10,335 million euros, indicating confidence in Spanish government securities. This interest persists even as the Treasury reduces yields in response to the ECB's ongoing monetary policy adjustments.
The Treasury, which operates under the Ministry of Economy, Commerce, and Business, plans to return to the markets on Thursday, May 8, 2025. In this upcoming auction, the agency expects to raise between 5,750 and 7,250 million euros. This auction will feature 3 and 5-year State Bonds, as well as State Obligations indexed to inflation with a residual life of 5 years and 7 months, and 30-year State Obligations.
Specifically, the Treasury will issue 3-year State Bonds with a coupon rate of 2.4%, maturing on May 31, 2028, and an interest rate of 2.301%, as marked in the auction of April 3, 2025. The 5-year State Bonds will carry a coupon of 2.7%, maturing on January 31, 2030, with an interest rate of 2.687% established in the auction of February 20, 2025. Additionally, the Treasury will offer State Obligations indexed to inflation, featuring a coupon of 1% and a maturity date of November 30, 2030.
For the 30-year State Obligations, the coupon will be set at 4%, maturing on October 31, 2054, with an interest rate of 3.693%, as established in the auction held on February 6, 2025. The Treasury's overall strategy for 2025 includes issuing a net total of 60,000 million euros, which is an increase of 5,000 million euros compared to 2024, primarily due to the need for reconstruction efforts in areas affected by recent disasters.
In gross terms, total emissions for the year are projected to reach 278,000 million euros, reflecting a 7.4% increase from the end of 2024. This increase is attributed to a higher volume of amortizations and a slight rise in net emissions. The Treasury aims to maintain an average debt life of around 8 years, a historical maximum achieved in 2021, which has helped mitigate the impact of rising interest rates in recent years.
Furthermore, the Treasury is committed to diversifying its investor base and will continue promoting the issuance of green bonds as a key component of its financing program. This approach not only supports sustainable finance in Spain but also aligns with broader ecological transition goals. The Treasury plans to conduct reopenings of the green bond issued in 2021, aiming to achieve a volume comparable to other references on the Treasury curve.
In total, the Treasury has scheduled 48 ordinary auctions of Treasury Bills, bonds, and obligations for the year. Additionally, it will utilize syndications for the issuance of certain references of State Obligations in 2025, further enhancing its financing strategy.
The recent auction results and future plans underscore the Spanish Treasury's proactive approach in navigating the current economic environment while ensuring sufficient funding for essential government functions and investments.
