The Public Treasury has announced the financing strategy for 2017, a year that will see a net issue of 35 billion euros, the same as last year. The gross issue will amount to 220.02 billion euros, slightly lower than last year, of which 122.9 will be placed in the medium- and long-term. The objectives for this year are to extend the average life of debt, reduce costs and diversify the investor base, similarly to in previous years.
The objectives are based on the fact that those established under the 2016 strategy were amply met. Net financing stood at 35.04 billion euros, almost 10 billion below the figure set at the start of the year, thanks to the performance of public revenue and more efficient use of the State Treasury. The gross issue stood at 221.36 billion euros.
The average cost of the new issues in 2016 continued to decline, from 0.84% in 2015 to 0.61%. The cost of servicing outstanding debt stood at 2.79% at the close of last year. Both figures are the lowest in the recent history of the Treasury. The buoyant economic situation and the continued confidence in Spain by investors have led to these good results.
The average life of medium- and long-term issues stood at 11.4 years, a much higher figure than that recorded the previous year (9.1 years) and more than double the figure for 2012. This pattern of issues has contributed to extending the average life of the outstanding debt portfolio, from 6.2 years in 2013 to 6.81 years in 2016, thus guaranteeing the sustainability of the State debt given the uncertainties of the international scenario.
For 2017, the Treasury has maintained its objectives of reducing costs, increasing the average life and diversifying the investor base whilst maintaining the appeal to the market in net terms to 35 billion euros. Gross financing will amount to 222.02 billion euros, of which 122.9 billion will be medium- and long-term issues, a figure that amounts to 2.54 billion more than in 2016. The issue of Treasury Bills will amount to 97.11 billion euros, some 3.88 billion less than last year.
The guidelines for ordinary auctions of nominal State Bonds and Debentures with a fixed coupon will not be modified. As a general rule, these ordinary auctions will take place on the first and third Thursday of each month. The expected issue in ordinary auctions will be placed within the range published without having to reach the maximum figure announced, as was the case in previous years.
This year, the Treasury will continue with its programme of Bonds and Debentures indexed to European inflation rate, which will allow the investor base of Spanish debt to be diversified. The auction of an indexed benchmark may be included in the first auction of the month. During the first three years of its life, this programme has accumulated a total volume of 28.54 billion euros and has progressively increased its weighting of the total public debt portfolio to exceed 3% of all outstanding State debt. The Kingdom of Spain has become a benchmark issuer in this market, together with France, Italy and Germany.
As in previous years, the Treasury will use bank syndications to place certain benchmarks, although auctions will remain the main method to issue State debt. Furthermore, the Treasury will have an option to convene special auctions, outside of the habitual calendar, in order to offer liquidity to certain benchmarks and thus improve the functioning of the secondary market. The possibility of using private placements is also envisaged in which a security is directly issued to an investor under preferential cost conditions for the State.
Pool Moncloa