Spain's Treasury reduces yield on three- and nine-month bills

Spain’s Treasury reduces yield on three- and nine-month bills

Spain’s Treasury has reduced the interest rate on bills to a more than one-year low, now paying 3.29% for three-month bonds and 3.41% for nine-month bonds. It is the lowest return offered by the Treasury at three months since June of last year and It is more than forty basis points below the maximum of 3.7% reached in February of this year.

Nine-month bills have also seen their yields fall to 3.41%, from 3.49% at last month’s auction. In this case, the interest rate is the lowest since May of last year, when these securities were sold at just over 3.2%.

Treasury bill yields continue to decline. The Treasury auctioned 2.031 billion euros (US$2.199 billion) in short-term debt at three and nine months, in the mid-range of the range of between 1.5 billion euros (US$1.624 billion) and 2 billion euros (US$2.165 billion) that it was initially considering, with a significantly lower cost.

The interest rate cut was felt in both terms marketed, but three-month bills broke a new support level by placing their yield below 3.3%, at 3.29%.

With this move, three-month bills are positioned as the Spanish short-term debt with the lowest profitability, something that is not usually the case in cycles of interest rate cuts such as the one currently facing the European Central Bank, ECB. The other terms do have an inverted curve structure, the shorter the term, the more you pay, with six-month bills paying 3.411%, slightly more than the six-month term (3.4%) and the twelve-month term (3.37%).

Beyond the distortion experienced in shorter-term securities, bills are gradually feeling the effects of the drop in interest rates. which the organization chaired by Christine Lagarde carried out in June.

In addition, the prospect that it may undertake another rate cut in September, which has increased its probability in the market to stand at above 70%, has also had an impact on the interest rates offered.

The ECB is expected to cut money prices in the coming months, although it may not do so at its next meeting on July 18. In line with this forecast, yields on several types of Treasury bills began to fall last month.