Treasury bills are once again attractive to small investors. And more and more are those who, to face the times of inflation, leave money to the State to obtain an economic return. The increase in interest rates by the European Central Bank (ECB) is making the price of debt more expensive and that of the State is not spared. In the first issue of the year by the Treasury, the bills have reached an interest of 2.98% for 12 months, the highest since 2012.
Despite the good times for this type of investment, it is not enough to combat the general rise in prices, which stood at 5.8% last December. But it does significantly exceed what is offered by the deposit window, traditionally preferred investment by the Spanish and the main alternative to bills due to their low risk. “The deposits of the main banks in Spain give a return of just over 0%. In other words, practically like having physical money in your pocket”, explains Javier Santacruz, vice-president of the Spanish Association of Financial Advisors and Planners (EFPA).
Because of this, the uptake of money in deposits is plummeting. In 2022 alone, they saw the investment of Spaniards drop by 16%, to 63.9 billion euros from individuals, according to data from the Bank of Spain. On the other side are Treasury bills, which from 2021 to 2022 went from capturing 17 million to 321 million, as indicated by the latest data from the Treasury through October. A figure that triples what was already recorded in September, which was 99 million. No wonder, given that returns quadruple the average rate of 0.7% offered by deposits. “Banks have no need to pass on the rise in interest rates by paying more for deposits, although they do so with loans because it suits them,” explains Antonio Gallardo, expert at iAhorro’s financial comparator, Banqmi.
In this scenario, savers can buy bills with 3, 6, 9 and 12 months through any bank -with the payment of a commission-, in the offices of the Bank of Spain or on its website from 1,000 euros or multiples of this amount. These titles are guaranteed by the State, so the risk is minimal. Despite the appeal, it has taxes. Taxation is the same as any other savings product. Up to 6,000 euros is taxed at 19%, between 6,000 and 50,000 is taxed at 21%, and for amounts greater than 50,000, at 23%.
The fact is that for conservative investors there is no better investment alternative, according to experts. For example, to get deposits with advantageous conditions, you have to go to entities that want to attract customers – such as EBN, MyInvestor, Orange Bank or PiBank – emerging fintechs or banks from the rest of Europe. “The letters, compared to the alternatives with practically zero risk, have no rival. Guaranteed funds force you to hold the money for 2 or 3 years, paid accounts have little profitability, pension plans have little liquidity…”, according to Víctor Alvargonzález, partner and founder of Nextep Finance.
Pibank is one of the best options that, at 12 months, offers 2.01%; and Wizink that pays 2% APR for 18 months. EBN Banc, on the other hand, offers 2.30% APR for two years. However, banks outside of Spain do offer better returns. Italy’s Banca Progetto, for example, offers up to 3% a year, while Portugal’s Haitong offers 2.85% a year, closer to the return on Treasury bills. “A large bank needs to take out a 2% deposit so that competition is unleashed and everyone does it,” he adds.
How long does it last?
“In the case of Treasury bills, they could rise a little more in the coming months, however we are reaching the limit of what they can rise in the short term, because we more or less know how far the rates can go”, concludes Alvargonzález.
Individuals are not the only ones who are betting more on this investment method. Companies also use them to make part of their capital profitable. And, while in 2021 companies invested 254 million euros in bonds, in 2022 it was already 718 million. In fact, it is the large holders who take part, while individuals only represent 0.42% of the investment.