- It also decreases the gross emission, which records its minimum level since 2012
- For the Secretary General of the Treasury and International Financing the lower need for financing confirms the confidence of investors in Spain
- In 2018, 8,000 million of the loan to the MEDE has been amortized, an amount practically similar to that amortized during the previous four years
The Spanish Public Treasury will reduce by 5,000 million the volume of net issuance planned for 2018, which will remain at 35,000 million euros, compared to the 40,000 initially established Good financing conditions, as well as the positive evolution of revenues have allowed this cut in The broadcast program. Compared to 2017, the Treasury's net financing needs have been reduced by 22%.
It also decreases by 6,500 million the gross emission planned for the year as a whole, standing at 213.7 billion euros, the lowest figure since 2012.
This has been highlighted by the Secretary General of the Treasury and International Financing, Carlos San Basilio, pointing out that "the lower financing needs compared to those initially foreseen are explained by a combination of factors. The main ones are higher tax revenues, a reduction in items of relevant expenses, such as the Autonomous Liquidity Fund (FLA), a decided policy to take advantage of lower interest rates to reduce the cost of debt and extend its terms and a more efficient management of the treasury ”
He also highlighted the positive message that is evident with this evolution, stating that "it is good news that the Treasury needs less financing than anticipated, as it confirms and in turn reinforces the confidence of investors in Spain."
The progressive reduction of the financing needs of the Treasury will contribute to the objective of reducing the weight of the public debt on GDP. This decrease also has a positive effect on the payment of interest, which will be, in cash terms, below the 31,547 million euros provided for in the General State Budget of 2018.
MEDE loan repayments
During this fiscal year, the three early repayments that have been made of the MEDE loan for the recapitalization of the financial system must be highlighted. At the moment, the Spanish Treasury is able to finance itself in better conditions than those implied in the European loan, which has allowed for 2018 to have made amortizations for a total amount of 8,000 million.
This is the largest amount amortized in a single year and is practically identical to the sum of disbursements made in the last four years as a whole (9,000 million). These repayments have reduced the outstanding debt to 23,721 million euros, 57.4% of the 41,333 million borrowed.
Likewise, the contribution of the Treasury to Social Security has increased, which has increased from 10,192 million euros in 2017 to 13,833 million this year.
The average cost of outstanding debt is at a minimum
To date, the Public Treasury has placed securities for 131,485 million euros, which represents 97.5% of the planned medium and long-term issues. In 2018, good financing conditions have been maintained. The average cost of outstanding debt has continued to decrease, reaching 2.39%, constituting a historical minimum. Likewise, the average cost of new emissions has also remained at a similar figure to recent years, standing at 0.67%.
The Treasury has continued in 2018 with its objective of extending the average life of the outstanding debt that stands at 7.52 years, compared to 7.13 last year.
Finally, it should be noted the diversification of the investment base and the progressive recovery of investors who in recent years did not participate in public debt purchases, which shows confidence in the Spanish economy. In this regard, it is important to highlight the participation of Asian investors in the syndicated issue made in June, the largest since 2012.