Individuals have become the major investors in Treasury Bills. Individuals have sought in the short-term debt of the State the profitability that the deposits of the large Spanish banks do not offer and they have ended February as the second investors in Letras de Tesoro Público, only behind the large banking entities, which they continue to be the main purchasers of government debt at the start of the year.
It should not be forgotten that the interest on government paper has exceeded 3% in recent auctions, levels of profitability that have not been seen since mid-2012, when Spain was hit by the debt crisis, while the average rate of Deposits stood at 1.31% at the end of March, the highest levels since 2014, although in February it reached 0.89%.
In this way, the profitability offered by the Treasury Bills continues to serve as a claim for individual investors, who ended February with 7,613 million euros invested in this asset, well ahead of what both insurers, such as pension plans or investment funds. European Central Bank (ECB) from last year to go reduces its balance and, therefore, also the purchase of debt from eurozone countries.
Thus, while the investment in Treasury Bills by individuals has skyrocketed by 79% (78.9%). In February of this year, it had invested 1,445 million euros compared to 6,856 million euros a year ago.
The body led by Pablo Hernández de Cos began to reduce its investment in state debt in July, after the ECB announced the cessation of net purchases of the APP on July 1, while it could use reinvestments from the pandemic purchase program, known by its acronym in English, PEPP, in a flexible way. In October, the Bank of Spain had just over 5,000 million euros, an amount that was reduced to 3,523 million euros in November, while in December the balance was reduced by 1,000 million euros, to 2,595 million euros . In addition, as of this 2023, the European organization also announced that it will stop reinvesting maturities.
Individuals outnumber insurers and funds
Investment by individuals in Letras del Tesoro Público has also surpassed insurance companies, pension plans and investment funds. As for the former, although the amount has doubled in the last year, they are still far below those of individuals. Thus, in February 2022 they had 1,115 million euros invested in State debt, a year later they had 2,190 million euros, 96.4% more, but 5,423 million less than what natural persons have invested.
2,050 million euros, 1,081 million euros less than in 2022
Finally, banks have also adopted a similar strategy to small investors given the rise in returns and the need to rotate their portfolio. Thus, at the end of February they had 15,891 million euros, compared to 7,463 million a year ago, which represents an improvement of 112%. Entities have taken advantage of the maturities of this type of debt that were taking place, with returns close to zero or negative, to invest in government paper with higher rates.