• The net issue is € 71 billion, including € 23 billion for the FLA
  • Gross financing is between 215,000 and 230,000 million, between 13.9% and 7.9% lower than the previous year
  • The average cost of outstanding debt at the end of 2012 was 3.91%, lower than the previous year, and the average life ended at 6.34 years.

The Spanish Public Treasury today announced the strategy for 2013, in which it foresees net financing needs of 71,000 million euros. In gross terms (without discounting depreciation) the figure is between 215,000 and 230,000 million euros, between 13.9% and 7.9% lower than the gross financing obtained the previous year (249,635 million euros).

The figure for net issuance set for 2013 corresponds to a forecast of the State's cash deficit of 38,063 million euros, plus the variation in financial assets forecast for that year (32,958 million). The latter figure includes the Spanish contribution to the capital of the European Stability Mechanism (MEDE) for 3,809 million euros, plus the financing needs of the Autonomous Liquidity Fund (FLA) for 23,000 million euros.

With these objectives, the Spanish Treasury faces 2013 in looser conditions than the previous year, also taking into account the improvement in market conditions with which the new year begins. Even in a situation of greater instability, as especially happened in the second part of 2012, the Treasury managed to successfully close its financing program. The average cost of issuance was 3.42% (3.01% counting the MEDE loan), compared to 3.90% at the end of 2011. The average life has closed at 6.06 years (6.34 counting with the MEDE loan), compared to 6.55 in December 2011.

The balance of the past year is the following:

  • Gross financing in medium and long-term instruments (government bonds and obligations, foreign currency and other issues, and the MEDE loan) amounted to € 152,187 million.
  • Net of amortizations, medium and long-term financing stood at 102,140 million euros. The Treasury issued two new three-year and one five-year references.
  • The net issuance of Treasury Bills has been negative since 5,556 million euros were issued less than the amortizations in the same year.
  • State Debt in circulation ended the year at 688,231 million euros in nominal terms, compared to 592,090 million euros in 2011. This increase is explained by the impact of the Autonomous Liquidity Fund, the injection of capital into the FROB, a Placement of State Debt to the Social Security Reserve Fund, as well as the loan received by the European Stability Mechanism.

Compared to 2013, the expected net issuance of 71,000 million euros is distributed in 59,000 million for medium and long-term instruments (121,318 million gross issue) plus 12,000 million euros in which it is expected to increase the circulation volume of bills of exchange Treasury compared to that recorded at the end of 2012.

Starting in February 2013, the 18-month Letters auction will be suppressed, which will be replaced by 9-month Letters. As a general rule, since February 2013, on the third Tuesday of each month, the 6 and 12-month Bill auctions will take place, while on the fourth Tuesday of each month, the Treasury will hold the 3 and 9-month Bill auctions.

The Treasury will also launch a new 2-year reference to complement its usual references to 3, 5, 10 and 30 years. The auction of the first reference to 2 years (State Bond with coupon 2.75% and maturity on March 31, 2015) will take place on Thursday, January 10, 2013.

Another novelty for 2013 will be the inclusion of the State Debt among the assets traded on the AIAF-BME SEND platform, which will improve the access of retail investors to the secondary market of public debt.

As for the euro area as a whole, the introduction of the so-called Collective Action Clauses (CAC) is foreseen in all issues with a repayment term of more than one year and whose first tranche is issued from January 1, 2013. In cases where the modification of the conditions of a debt instrument can be considered, these clauses avoid the need to achieve unanimity among all the bondholders and allow such modifications to be adopted on a binding basis, preventing a minority can block solutions approved by the majority.

CACs were first introduced into the debt of some developing countries and have been progressively adopted in different jurisdictions. The Member States of the Euro Zone have agreed, in line with the recommendations of the G10 and other international institutions, the introduction in 2013 of CAC in their sovereign debt to adapt to international best practices.

The State Securities Issuance Strategy documents in Spanish and English are available at www.tesoro.es

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