The Treasury accelerates the placement of debt with only two months remaining in the extra purchase plan of the European Central Bank.

Sources from the Ministry of Economy assure this newspaper that 40% of the more than 230,000 million euros planned for 2022 have already been issued, which represents a 6% faster rate than in 2021. This acceleration occurs when Spain will stay already within two months without the extra help from the ECB to be able to place public debt, according to the vice president of this institution and former Minister of Economy,

Luis de Guindos

.

The Secretary of State for the Economy,

Gonzalo García Andrés

, declared this Thursday that "the Treasury is prepared" for this change of wind in Frankfurt, but the financing of the State is complicated and more expensive.

The change in cycle was noted in the auction this Thursday with a sharp rise in the remuneration that Spain has to offer to place debt.

He was able to sell 2,381.12 million euros of three-year bonds,

but with an interest of 0.863%, well above the 0.349% offered in the previous auction.

In terms of 30-year obligations, this body dependent on the Ministry of Economy has awarded 1,700.11 million at 2.302%, well above the 1.262% offered in the previous issue.

The ECB's oxygen has been key since the pandemic so that Spain and other countries like Italy could place debt on the markets at low prices, but it is coming to an end and sooner than expected.

The president of the ECB,

Christine Lagarde

, has already announced that the states' public debt purchase plan would end in the third quarter, but De Guindos points out that the ECB is in favor from the first possible moment, in the month of July.

"My opinion is that the program should end in July.

Currently I see no reason not to close it

Guindos has declared to Bloomberg. He refers to the debt purchases of all countries, but the end of the program has a particular impact on the southern EU countries that combine high indebtedness with greater distrust of the markets with Spain. and, worse still, Italy, in the lead.

After the auction this Thursday, the Treasury has already issued 94,172 million in 2022 "and a percentage of execution of the financing program of 40% is reached," they point out in the Ministry.

The acceleration is consistent with the prospect that the ECB will stop buying and that it will also raise interest rates.

This horizon hardens the market for the southern countries, which, as Guindos stressed, have seen a certain rise in risk premiums in recent months, although without levels that are still worrying for the ECB.

"

We have seen a little widening of the differentials for Italy, Spain or Portugal.

But this is not a fragmentation like we had in 2010-2012. It is totally different."

The risk premium has been hovering around 100 points for weeks with respect to the German bond, nearly 40 more than six months ago.

However, as the Ministry points out, the average cost of outstanding debt stands at 1.55%, a new historical low (below 1.64% at the end of 2021), due to the substitution effect of old debt with higher rates.

The average life of the portfolio is 8.02 years.

The ECB is already reducing purchases significantly and buying practically all the extra debt issuance that Spain needed during the pandemic is beginning to be marginal.

The average of purchases was about 8,000 million per month and the forecast in the coming weeks is to drop to less than 2,000.

The end of the debt purchase program responds to the ECB's decision to

focus on fighting inflation

and abandoning stimulus policies that could fuel it, such as the purchase of government bonds.

To this measure must be added the possible rise in interest rates by the ECB, but Guindos does not make it clear that it could be as soon as in July as well.

"A rate hike doesn't have to happen automatically once the debt purchase program is over. We may have a time in between and we depend on the data."

The former minister declares himself in favor of ending the purchases in July and carefully studying when to raise rates afterwards.

"It can be in July, in September or later,"

he says.

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