The Council of Ministers analyzed the Annual Report on the Policy of Indebtedness of the Public Treasury in 2018

The Treasury closed 2018 with a net issuance of State Debt almost 24% lower than the previous year

The improvement in financing costs that occurred in 2018 is accenting in the first half of the year. The average cost of the debt issued in 2019 is 0.49%, below the 0.64% with which it closed 2018, and the average cost of outstanding debt has been reduced to 2.34%

In line with the government's fiscal discipline commitment, the Treasury's emission policy is marked by the objective of reducing the ratio of public debt to GDP and reinforcing its sustainability in the medium and long term, through an adjusted issuance, the efficient management of the treasury, the lengthening of the amortization periods, the expansion of the investor base and an active management of the portfolio to reduce the payment of interest

The acting Minister of Economy and Business, Nadia Calviño, has presented to the Council of Ministers the Annual Report on the Policy of Indebtedness of the Public Treasury in 2018, for its subsequent referral to the Cortes. The report includes the lines of action and the execution data of the Treasury financing program.

In 2018, both the cost of the debt issued during the year and that of outstanding debt were reduced to 0.64% and 2.39% respectively.

This reduction is especially significant because it is taking place within a framework of lengthening the average life of outstanding debt, which stood at the close of 2018 at 7.45 years. It is also in line with the reduction in the weight of the Letters, which currently represent just under 7% of the total Treasury portfolio, which represents the lowest percentage of the main European countries, and with the increase of the issue in the stretch of more than 30 years. Spain was the largest European issuer in the long stretches of the curve during the year.

Net financing needs decreased by 24% in 2018

The Treasury completed its 2018 financing program with gross funding of 212,964 million euros, the lowest figure since 2011, and a total net issuance of 34,277 million euros, representing a reduction of 9% and 23%. 9%, respectively, compared to the close of 2017.

This reduction was possible thanks to the favorable budgetary execution and to a more efficient management of the treasury. In this sense it should be noted that the good management of the Treasury has been recognized internationally. Last December he was awarded as sovereign debt issuer of the year 2018 by the specialized publication International Financing Review (IFR). In 2019 it has received two other prizes, The Banker magazine has awarded the Treasury for the first time in the category of Sovereigns, Supranationals, Agencies, for the syndicated 10-year issue in January and in May the Global Capital magazine granted it the award to the "Most Impressive Sovereign Funding Team".

Another outstanding element has been the improvement of the credit rating of the Kingdom of Spain by the four main rating agencies, which has favored the access of the Treasury to a broader investment base. The confidence of the markets in the Spanish economy has resulted in the presence of new investors, especially Asians, and investors of high quality.

The improvement in financing costs made possible in 2018 the realization of three early repayments of the loan of the European Stability Mechanism (ESM) for the recapitalization of the financial system, amounting to 8,000 million euros. This is the largest amount amortized in a single year and is practically identical to the sum of disbursements made over the last four years (9,000 million). The amortizations made allow a savings of 350 million in interest payments throughout the life of the loan.

In 2019, Treasury financing costs continue to fall, registering new historical lows, with an interest rate of 0.49% on debt and the average cost of the debt stock at 2.34%. . On the other hand, the average amortization periods, currently at 7.48 years, continue to be extended in line with the main European issuers.

In 2019, the Government maintains its commitment to fiscal consolidation, which has already reduced the amount of net issuance forecast for the year by 5,000 million to 30,000 million.

In line with this commitment, the objective is to consolidate the decline in the public debt to GDP ratio this year, from 97.1% in which it closed 2018 to 95.8% foreseen in the Stability Program for 2019.

Finally, the reduction in the average cost of the debt, which is also reflected in the significant decrease in the risk premium, as well as the lower financing needs are allowing in 2019 a saving of 548 million euros in the interest payments of Debt.

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