• Gross issuance decreased to 239,369 million in 2015, most in the medium and long term and below the previous year
  • The average cost of issuance fell by half in 2014, to 1.52%, and was at a low in the euro era
  • The objectives for this year continue to be to reduce costs, extend terms and diversify the investment base

The Public Treasury has announced the financing strategy for 2015, a year in which it will make a net issue of 55,000 million euros, the same as the previous year. The gross issue will amount to 239,369 million euros, below the previous year, of which 141,996 will be in the medium and long term. Despite not increasing its net issuance, this year the Treasury will assume in its program the financing needs of the Autonomous Communities (CCAA) and Local Authorities (EELL) that adhere to the measures of Royal Decree-Law 17/2014.

The objectives for the year that has just started are based on the successful fulfillment of the strategy set in 2014. Net financing has stood at 55,641 million euros, almost 10,000 million below the forecast at the beginning of the year, and the gross has risen to 241,333 million euros. The average cost of issuance in 2014 fell almost half, from 2.45% to 1.52%, and the cost of outstanding debt stood at 3.48% at year-end. Both figures are the lowest in recent Treasury history. The good situation and the improvement of confidence in Spain by investors have allowed this reduction in cost and at the same time extend the average life of the State Debt in circulation to 6.28 years.

Furthermore, the good market conditions in 2014 have allowed the Public Treasury to reduce the maturities initially anticipated in 2015, especially high due to the fact that the public issuer had to concentrate in 2012, during the worst stage of the crisis, its emissions in the tranche of three years. The main tool used to reduce the maturity profile has been to issue in 2014 a lower volume of Treasury Bills than initially anticipated, compensating for this with a higher issue in the medium and long term. In this way, in 2014, higher amortizations than those initially considered have been faced, which allows us to approach the present exercise with greater comfort.

For 2015, the Treasury persists in the objectives of lowering the cost, maintaining or extending the average life and diversifying the investor base. It maintains the appeal to the market in net terms, up to 55,000 million euros, which will allow it to assume financing needs of the Territorial Treasuries, including the maturities of national bank loans. These new financing tools for the CCAA and EELL, which aim to facilitate the objectives of budgetary consolidation thanks to a more efficient management of Public Debt emissions, will allow global savings in interest for all Public Administrations.

Gross Treasury financing in 2015 will amount to 239,369 million euros, of which 141,996 will be in the medium and long term, a figure that is 264 million less than in 2014. The issuance of Treasury Bills will be 97,323 million euros, some 1,730 million less than the previous year.

The guideline will not be modified in the ordinary auctions of nominal Bonds and State Obligations with a fixed coupon. As a general rule, these regular auctions will take place on the first and third Thursdays of each month. In order to be able to adjust the amount issued to the auction demand, the Treasury will announce a range as an emission target, so that the expected issue volume is close to the central part of the range. The amount issued will be modulated towards the highest or lowest part of the range depending on the interest rates bid and other market circumstances or the Treasury issuance program.

This year the Treasury will continue to develop its program of Bonds and Obligations indexed to European inflation, which were an innovation in last year's issuance program and which allow diversifying the investor base of Spanish debt. As a novelty, these products will be incorporated into regular auctions, with the aim of providing more liquidity to these references and giving investors greater access to these financial products.

In addition, as in previous years, the Treasury will have the option to call special auctions, outside the usual calendar, to provide liquidity to certain references and thus improve the operation of the secondary market. The possibility of resorting to bank syndications to place the debt is also foreseen, although auctions will continue to be the main method of issuing State Debt. Likewise, the Treasury may also issue Debt through private placements in which a value is issued directly to an investor, under conditions of cost favorable to the State.

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