The Treasury will issue up to 35,000 million in debt this year and hopes to continue lowering its bill


Continuity in the sovereign debt issuance strategy. The public treasury has set itself to issue in 2019 in net terms up to 35,000 million euros in letters, bonds and obligations of the State, almost the same figure finally placed last year, and hopes to continue reducing the average cost of financing the country and, therefore, cheaper the bulky bill that the level of indebtedness reached by Spain is assuming for the public coffers.

The issuance strategy defined by the general secretariat of the Treasury and Financial Policy contemplates a maximum issue of 35,000 million, which is 2.1% more than the 34,277 million issued in 2018. This slight increase is contrary to the economic picture, which foresees a reduction in the deficit to 1.3% of GDP, which in theory will imply lower emission needs. In any case, the Secretary General of the Treasury, Carlos San Basilio, explained at a press conference that the issuing body trusts that throughout the second half of the year can be announced a reduction in real emissions, as happened the last year, when net emissions of 40,000 million were set, compared to just over 34,000 million.

San Basilio explained that even any deviation in figures such as the expected public deficit would not force to increase that figure of 35,000 million, which also includes credits to pay pensions and the money that goes to the liquidity and financing mechanisms of the autonomous communities. In this sense highlights that the return last year to the market of Andalusia and the Balearic Islands and the possible departure from other regions of the State umbrella, as well as the lower public deficit of the communities will reduce this item from 15,000 to 9,000 million net.

The Treasury also foresees that the cost of outstanding debt, which last year closed at an average of 2.39%, will continue to be reduced during this year. And that the normalization of the monetary policy of the European Central Bank (ECB), which It has already begun with the end of asset purchases and could continue in 2019 with the first increases of the official rates, will result in a generalized increase in interest rates. In this sense, in the Government they trust that the appetite of the investors for the Spanish debt weighs more. "The general outlook on the Spanish economy will continue to be positive," said San Basilio, who has admitted in any case that the market will suffer episodes of volatility as a result of general political and economic uncertainty.

This reduction in the average cost of debt in circulation has contributed not only to the cheapening of new issues, which are made at an average interest of just over 0.6%, but also that the Tesoro began a few years ago a strategy to extend the average life of debt in circulation, now of 7.45 years. Throughout 2019 it is expected to continue increasing, although not at the same pace, that average life by issuing only paper in the medium and long term, while more letters will be written off than those issued. With this, the Treasury management trusts to protect the State even more from this foreseeable rise in the price of money by the ECB.


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