Spanish banks reduce sovereign debt while foreigners increase their purchases

21 Sep

Spanish banks continue to sell positions they had in Spanish bonds (a way to swell their income accounts) while foreigners increase their holdings and already have 358,101 million , almost half of the total (49.44%).

Specifically and according to Treasury data

Foreign investment in debt increased by 15,504 million in November and has already been up for seven consecutive months, after the small break registered in April. On the other hand, Spanish banks reduced their holdings by 5,426 million in the same month and now have 25.73% of the total, 186,340 million .

The bank covered the gap left by foreign investors in Spain during the worst moments of the sovereign debt crisis, when they stopped buying securities and took money out of the country. However, now that the foreigners have recovered their investment pace, financial institutions are fleeing from the low returns that the Treasury is offering.

Foreigners bought again in August 2012, when they returned to the markets and resumed the position of principal investor. Since then and over the past year, they have been gradually raising their investments, except for some stops, such as March for the rescue of Cyprus and some more decline in the summer months.

The profitability of all the letters and some bonds

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In fact, the profitability of all the letters and some bonds is currently below 1% and reached negative rates in the secondary market in the eighth month of the year in the case of the three-month letters, the paper a shorter term than the Treasury sells.

The bonds are also at a minimum, with the interest of references to three and five years below 1% and with the profitability of the paper at ten years in minimums (1.6%). In November, the month to which the latest Treasury data refers, the yield of the ten-year bond was slightly above 2%.

This situation has not affected foreign investors

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But banking and small investors, who have reduced their purchases since last spring. However, in November they increased their holdings by 65 million.

Even so, banking is still the second largest investor, followed by insurance companies, which reached third place in November by buying 4,532 million more, compared to public administrations, which reduced their purchases by 218 million and now have 7.34% of the total. Behind are investment funds, with 4.61% (33,375 million) and pension funds with 2.09% (15,185 million).

Those that accumulate less debt are non-financial companies, with 1.80% (13,055 million); other financial institutions, with 0.79% (5,695 million) and natural persons, with 0.56% (4,069 million).

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