The Bank of Spain (BdE) and the Public Treasury are overwhelmed these days by the sudden interest of Spanish savers in finding profitability and refuge for their money due to low or no remuneration on deposits. On the rebound, the two public bodies have suddenly become rivals of the private financial entities when it comes to intermediating this financial product with state guarantee. They could do it in their usual banks and brokers but the direct accounts support lower commissions and the “weariness” of the clientele with them is beginning to be noticed.
From queues at the central and Bank of Spain delegations, to the establishment of a prior appointment system or the collapse of the Treasury website, its direct sales channel, denote interest. In just one month, more ‘paper’ has been sold to retailers than in all of 2022, causing a slowdown in the response times of the website,” it reads on the website of the state issuing arm.
Is the debt running out? Due to the messages of scarcity and overdemand that both public entities convey, it seems so, but the State will continue to manufacture debt at a record rate this year to finance the deficit in the Government’s accounts, as well as to refinance Bills, Bonds and Obvenacioneshora. There will be import issues of more than 250,000 million euros and, of these, more than 70,000 million will be newly created debt.
In January alone, the Treasury sold more than 400 million euros on its online channel, according to its general director, Álvaro López Barceló, in statements to ‘Cinco Días’. From the Bank of Spain they decline to give figures on the influx of clients or the volume of debt that they have sold in recent weeks of furor with the product, but their customer service windows had to be reinforced with more personnel. The problem is that the public channels of the BdE and Treasury do not have a network and teams of people for a massive placement of this type of financial product.
Escalation of returns
Starting this Tuesday, February 7, the agency will only attend in person by appointment, a waiting list that will run until mid-March. It will be for the 16 lucky provinces that have a Banco de España headquarters. A Coruña, Oviedo, Bilbao, Valladolid, Zaragoza, Barcelona, Madrid, Valencia, Palma, Alicante, Murcia, Malaga, Seville, Badajoz, Tenerife and Las Palmas. The inhabitants of the other 36 territorial units including Ceuta and Melilla will have to move to be able to do so. The BdE only charges a commission of 0.15% with a limit of 200 euros, which is only reached for investments of more than 100,000 euros. On the other hand, financial institutions more than double those figures from the regulator.
The repentance rage for short-term debt is coinciding with a new fluctuation in the market in the heat of the rate hikes of the European Central Bank (ECB) that hurts debt investments. The yields of the 3, 6 and 12-month Letters have risen again in the secondary market to 2.32%, 2.69% and 2.9%, respectively, in anticipation of the consolidation of expectations of higher rates. In March, the ECB will raise the price of money to 3.5% and is considering placing them at 3.75-4% in May, according to an announcement by its president, Christine Lagarde, last Thursday.
For the conservative investor, short-term fixed income continues to be an oasis even if the prices of the Letters drop because they are mostly investments to maturity to collect the corresponding coupon and recover the entire capital. However, the current scenario discourages longer terms because the investor does usually make cash along the way. What taxation supports short-term debt? The yield obtained by the Treasury Bills, regardless of their term, is taxed at 19% up to 6,000 euros, the tranche of the tax base between 6,000 euros and 50,000 euros is taxed at 21% and the tranche that exceeds 50,000 euros at 23%.
Another more accessible route for ultra-conservative investors who are looking for an alternative to deposits or to the Bills themselves is to resort to investment funds, which have tax advantages on transfers and as long as the capital is not reimbursed to the account. Treasuries, monetary funds or vehicles that invest in Bills are also receiving high interest from savers, as confirmed by Emilio Ortiz, investment director of Mutuactivos. “Rises in rates make fixed income capture the interest of investors again. In recent months we have launched several vehicles aimed at testing this opportunity in addition to our family of fixed income funds,” he says after the launch this Monday of the Mutuafondo Deuda Española, specialized in short-term fixed rentals and with an annual return target of 2.5%.
