• The bank is preparing to remunerate deposits this summer: "There is less and less to have to pay"

Investing in Treasury Bills is fashionable. It was seen with the long queues carried out by the Spaniards in the first months of the year in front of the Bank of Spain and the numbers increasingly endorse this trend. According to the latest data available from the Public Treasury, in February the percentage of bills held by individuals reached 10.4%, levels not seen since the pre-Lehman Brothers era, in 2007, when this percentage reached almost 11%. And it is on track to reach all-time highs, pending the March figures.

The figure that is known to date is that in the third month of the year the possession of Treasury Bills already reached a new milestone, standing at 10,847 million euros, 9,021 million more than at the end of last year, almost six times more. And the comparison is even more significant if it is made year-on-year, around March 2022. At that time, Treasury bills still maintained a negative yield of -0.46%. Hence, it is not surprising that individuals had in their possession only 15 million euros in total (723 times less than the billions they hoarded in the first quarter).

During the month of April, the securities trading service of the Public Treasury website received a total demand of 1,325 million euros, which represents a daily average of 44.2 million euros by Spanish households.

October was the month that changed the pace when the most conservative investor was devastated by the debacle that starred fixed income, with historic losses for the portfolios of bonds and debt securities of States and companies after the European Central Bank (ECB) decided in July to start with the largest and fastest rise in reference rates for money in the eurozone. Individuals had in September last year with 0.13% of the total issued in bills that rose to 0.42% in October, to 1.26% in November and closed December on the level of 2.4%. In two months it had multiplied by 4 and the explanation lies, plain and simple, in that it is difficult for a Spanish saver to find an alternative to the profitability offered by Treasury Bills. If the average rate of the twelve-month issues carried out by the agency monthly is taken as a reference, the return offered by these debt securities has gone from 0.5% in June 2022, the first month in positive, to 1.98% in October to touch 3% in January of this year. The last auctions in March and April have taken place at rates above 3%, at 3.33% and 3.16%, respectively.

Third 'holder' of Letters

The representation of families as an important part of State financing through this instrument continues to increase. Proof of this is that of the total issued in this way, individuals have become the third largest holder of bills behind non-residents, in whose hands is 43% and financial institutions, with 21.7%, with data at the end of February, on a total issued of 73,166 million euros. Keep in mind that the Letters are the only affordable products for the small saver because they require a nominal minimum of 1,000 euros and are invested in multiples of this amount. However, the bulk of the State's financing is not in the Letters, but in large-scale debt issues between institutions. At the end of February, the balance of bonds and obligations issued by the Public Treasury amounted to 1.15 trillion euros. Of these, only 0.14% was in the hands of individuals, for a total of 1,560 million euros, which represents 14% of the volume they hold in Letters.

"Is this percentage going to continue to grow?" asks Sofía Antón, director of Auriga Bonos, the only fixed income broker in Spain. "As long as there is no alternative, the bills are the best option for the individual who wants to put their savings to work in the short term. For a longer period there are many options with investment grade bonds [which is prime debt according to the rating of its debt rating] for a maturity period of 3 to 5 years with yields above 4%, as is the case of companies such as Renault, Volkswagen, Porsche or all Italian banks with many debt issues. concludes the expert.

With the largest entities in the country without commercial offer in deposits, the most conservative alternative for the investor are the Treasury Bills for two reasons: the security offered by issuing in the Spanish State and the fact that they have an assured maturity date in which they will receive back the money invested (nominal) plus the coupon to which the Treasury has committed itself in the auction. According to sources in the sector, currently about 70% of purchases of bills by individuals are made directly through the Bank of Spain, in person or through its website. Only 30% of small investors buy in the secondary market offered by few brokerage firms, such as Renta 4 or Auriga Bonos.

Other alternatives for savers go through investment in housing, although liquidity is practically nil. The gross rental yield stands at 3.4% at the end of the first quarter of the year, according to data from the Bank of Spain, below inflation, which implies losing money or, at least, an opportunity cost of 300 basis points with CPI forecasts for this year. And there is one more possibility such as the investment in the stock market that, annualized, generated returns of 7.7% in March, but in May falls to 5.8% if the last twelve months of trading of the Ibex 35 are taken as a reference.

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