2023-10-16 00:16:43
Monday, October 16, 2023, 00:16
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When we want to invest, the first thing we have to decide is whether we want to do it in fixed or variable income. The first is traditionally recommended for savers with less risk tolerance and one of its traditional instruments is public debt. It is not risk-free (no investment is), when we talk about countries integrated into the EU the probability of default is minimal.
The State issues public debt to obtain financing with which to sustain public spending. It does this through various instruments: bonds, debentures and bills. In any case, they are issued at a discount. That is, they give the right to collect a predetermined amount on an agreed date and this date is what differentiates the three instruments. The obligations exceed five years (there are five, 10, 15 or 30 years), the bonds have a term of 2 to 5 years (normally there are three-year bonds and five-year bonds), while Treasury bills are issued for a term of less than one year. Currently the Treasury issues bills with terms of three, six, nine and 12 months.
In all cases, the profitability (difference between the acquisition price and the redemption price) is known in an auction. Investors submit their purchase requests to the Treasury, and it decides the minimum price it agrees to receive. The minimum amount of each request is 1,000 euros, requests that exceed this amount must be multiples of 1,000 euros.
How to buy Treasury bills?
The next auction of Letters (in this case for three and nine months) will be on the 17th. As always, the minimum amount of each request is 1,000 euros, requests for a higher amount must be multiples of that amount and a 101% deposit (if we invest 1,000 euros we must contribute 1,010). We can participate in it in the following ways:
– Going directly to the offices of the Bank of Spain. The one in Bilbao is at number 10 Gran Vía, but you must make an appointment in advance. In this case, the last day to make requests will be the 16th. The commission is 1.5 per thousand, with a minimum of 0.9 euros and a maximum of 200 euros on the amount to be transferred.
– Through the Treasury website, which could collapse again and which in any case requires a digital certificate, permanent cl@ve or electronic DNI. Through this channel, requests must be formalized one week in advance. As in branches, the commission is 1.5 per thousand, with a minimum of 0.9 euros and a maximum of 200 euros on the amount to be transferred.
– Ask our bank to make the purchase on our behalf, which will charge us a commission for the operation.
Are they really risk-free?
As we have already said, it is not a completely risk-free investment. The more doubts a country generates, the more it has to pay the investor to lend it their money. Thus, today emerging countries such as Brazil, China or India are the ones that offer the most interest in their emissions, but also the ones that entail the most risk. In the case of Europe (although it is worth remembering the scare of Greek investors before the rescue) we are talking about very safe economies with a good rating from the rating agencies, which are in charge of rating the credit quality of the issuer through the analysis of its annual budget, the prospects for meeting the set objectives and the capacity to repay debt, so the final guarantee for all these issues is based on the solidity of the economic policy of the competent administration’s environment.
On the other hand, where it is easier for us to lose is the secondary market in which these securities are traded once issued. In it you can buy or sell if, for example, you do not want to wait for the deadline to expire. Orders can be given through the bank or a securities agency and will be executed in the Electronic Public Debt Stock Market. In the same way as if it were any other security listed on the Stock Exchange, the return obtained will be the difference between the sale price and the purchase price, and you may gain or lose depending on the market price at that time if the agencies rating have devalued the credit quality of the issuer.
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