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Invest in Public Treasury: so you can use your savings safely

Date: June 19, 2024 Time: 12:49:02

Knowing what the public treasury is and what investment products it presents to the public is important. In Spain, thanks to our economic model, the state is also an economic agent. And finally, it is one more way of investment for any citizen. Buying public debt has become a great alternative for those who are not yet committed to investing in bank deposits.

It is an absolutely essential body to understand economic policy. However, many people do not understand how the way to invest in it works. Therefore, from here it will be explained how these investments can be made. Like any economic agent, the State has its expenses and income.

To the extent that this institution can spend more than generate a surplus in certain financial years, it is when it becomes indebted. From here the public treasury issues securities so that citizens can invest in them. How about we shed more light on this topic?

What is the public treasury?

The most precise definition could be that it is the administrative body in charge of managing the State’s financial resources. Referring to this body is referring to the Treasury and International Financing Secretariat. All this belonging to the Ministry of Economy. One of the most important functions of the public treasury is the management of public debt.

This implies the issuance of bonds and other financial instruments that allow the government to obtain financing to cover its spending needs when revenues are not sufficient. Its objective is to guarantee financial stability and the proper functioning of public finances. It is also responsible for managing interest payments and amortizations.

What debt securities does the public treasury issue?

There are several and they are distinguished, above all, by their term or expiration date. Here are the most important ones:

Treasury bills: They are considered short-term fixed-income securities, with a maturity period that normally does not exceed one year. They are used by the government as a form of temporary financing to cover short-term liquidity needs. These securities are purchased by investors at a set price and the face value is returned when the maturity date arrives. They can be obtained through financial institutions that have the proper authorization and also through certain brokers. State bonds: It is a type of value more in the medium term if we compare it with treasury bills. Its maturity period is between 2 and 5 years, generally. They can be published by public bodies but they can also be published by private companies or associations. The same title specifies what annual interest is paid to investors. State Obligations: Very similar to treasury bonds but different in duration. It is a long-term value. They are characterized by having very little risk. They are usually attracted by conservative investors who prefer to diversify their portfolio with calm and not very volatile products. The government uses the resources obtained through the issuance of state bonds to finance infrastructure projects, public services, social programs and other needs of the country.

It should be noted that all the public treasury investment instruments mentioned above were offered through auctions. Each product has its own and conditions to enter them and proceed to the different investment options. At the beginning of the year, the Treasury establishes an annual calendar of auctions.

In short, all the debt products issued by the public treasury will be used by the state to bear the expenses of different needs that it may have: social, infrastructure or any other area in which it is covered with financing. Undoubtedly, the assets that are cyclically popular for different investors. After all this explanation, we hope that everything that surrounds the public treasury becomes clearer.

Treasure letters

Last Tuesday, the Public Treasury carried out an auction in which it managed to place 2,069.96 million euros in 3 and 9 month bills. Despite the fact that the marginal interest rate has been higher than in the last auction, the demand has been high. Specifically, 529.74 million euros in 3-month bills have been sold, with a marginal interest rate of 3.263%, the highest that the State has paid at auction.

During this month, the auctions have been influenced by the introduction of a new syndicated bond with a term of 10 years that expires on October 31, 2033. The Treasury has issued 13,000 million in the auction and has received a demand of more than 85 133 million euros, one of the highest figures recorded in the organization’s history. The bond, launched last Wednesday, has a coupon of 3.55% and a yield of 3.556%, which is equivalent to 10 basis points above the current 10-year benchmark that matures in April 2033.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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