Despite the rise in interest rates, Spanish banks are reluctant to remunerate deposits. The offers that exist are almost testimonial and the returns they offer barely manage to bite inflation that remains high. Given this scenario, private investors have also turned towards Treasury bills. According to the data compiled by the Public Treasury, the investment of natural persons in short-term State paper has multiplied by 20 in October with respect to how the year began.
Thus, if in the first half of the year, individuals invested around 15 million euros per month in Treasury Bills, starting in June, just when the 6- and 12-month bills again offered positive returns, coinciding with the first rate hike by the European Central Bank (ECB), an investment went from 19 to 25 million euros.
However, the great leap in the purchase of this type of asset by these investors occurred in October (latest data published by the Treasury) when 321 million euros were purchased in this State paper. In September it was close to its centenary (99 million euros), which represents an increase of 224% month-on-month. This interest in acquiring Treasury bills is also noticeable in the Bank of Spain. The regulatory body establishes that those responsible for Direct Accounts have seen a notable increase in debt purchase operations both through its Direct Accounts service in Madrid, and in other branches.
The reason for this resurgence of Treasury bills can be found in the fierce fight in which central banks have been involved to control inflation that is still far from the 2% target set. Thus, the ECB has raised interest rates since July up to four times, which has led to closing the price of money in 2022 at 2.5%. This has been transferred to the Spanish debt curve, which, as financial sources point out, now offer “very interesting returns with limited risk.”
This allowed individuals to buy six-month bills in October with a remuneration of 1.56%, while one year was close to 2%. In that month, the average deposit rate compiled by the Bank of Spain stood at 0.34%. Without forgetting, that in the last Treasury auction, this week, the six-month paper offered 2.6% and one year the interest climbed to 3% “To achieve this level in a Spanish bond with 10 years to maturity, we should go until 2014”, these same sources highlight.
How to buy treasury bills
In addition to easy profitability and security, the purchase of Treasury bills can be done in a way and hardly involves expenses. There are three options to buy Spanish debt. The first, through the Public Treasury website, selecting the securities purchase service as an option. In this case, the individual must have an electronic ID or digital certificate (Class 2CA). They can also be purchased at bank offices and securities agencies and companies, in these cases, the commissions derived from those set by the entity, although they are usually 0.10%, and in this case there is no obligation to buy amortization commissions .
Another option is to do it through any branch of the Bank of Spain, not only the one in Madrid, but also those that are spread over different provinces. On the agency’s website you can check where the offices are. Regarding commissions, the Public Treasury recalls that cash transfers accrue in favor of the Bank of Spain the commissions agreed upon by its Executive Commission. Since January 2, they have been set at 1.5 per thousand, with a minimum of 0.9 euros and a maximum of 200 euros, on the amount that must be transferred.
The minimum amount would be for a nominal value of 1,000 euros. In other words, the private investor has to take into account that the State debt is issued at a discount, so the purchase price will be less than the nominal value, except in the case of negative returns. If you want to buy larger quantities, these must always be multiples of 1,000 euros. Lastly, the profitability obtained by the bills will be the difference between what is paid for them and what is returned on the expiration date, which is the nominal amount requested, that is, these 1,000 euros.