The Treasury has placed the issuance of public debt bonds scheduled for today in the highest part of the expected range after detecting, as indicated by sources from the organization itself, that this type of product has become a “safe haven asset” after the crises from Credit Suisse.
Investors are developing these days, with the closure of Silicon Valley Bank (SVB) and the turbulence in the Swiss bank, a strong aversion to risk. The price of gold rose 1% yesterday amid stock market crashes in the European banking sector, reaching its highest level since early February.
“The greater uncertainty has increased investors’ risk aversion, turning sovereign debt into a safe haven asset,” indicate Treasury sources. Today the second March bond auction was held to place five, ten and thirty-year bonds, at a particularly sensitive time in the markets.
The result has been strong demand and the Treasury’s decision to place 6,298 million euros, in the upper part of the target range, which was between 5,500 and 6,500 million euros. “The ability of the Treasury to issue a 30-year reference in an environment like the current one, marked by strong volatility as a result of the crisis episodes in the American banking sector and Crédit Suisse, stands out,” the agency indicates.
The cost of debt has been reduced in recent days, which has allowed the 10-year bond to be issued 40 basis points below its last reopening two weeks ago. The other two references have been issued at slightly higher rates because, according to the agency, their latest issues had occurred longer ago.
Unlike bills, in which 45% is traded between Spanish individuals, in this case the participation of non-resident investors continues to be the majority. They are long-term products, outside of retail channels.
The five-year bond was placed at 2.99%, compared to 3.36% for the ten-year bond and 3.82% for the thirty-year bond. Both SVG and Credit Suisse have seen strong deposit withdrawals amid investor mistrust.
