The public debtparticularly the treasure lettersare the hot investment asset for little savers. This is demonstrated by the queues at the headquarters of the Bank of Spain and the problems that the Treasury website has had in recent weeks. His cost effectiveness has made them very attractive and last year individuals increased their portfolio of State securities for the first time since 2015 (until November by 1,225 million and 121%, at 2,232 million). Bills for three, six, nine and twelve months auctioned in January, thus, had an interest of between 2.198% and 2.998%. Faced with this, the average type of new deposits up to one year term granted by the banks in December was 0.42%. The Treasury offers this simulator to check what profitability could be obtained.
What are treasury bills?
They are debt securities of the State of fixed rent (that is, with an established maturity period and that offer an invariable and pre-fixed return) and short-term (three, six, nine and twelve months). They are sold through auctions: Generally, three- and nine-month securities are auctioned on fourth tuesday of each month, while those of six and twelve months do so on third tuesday of each month. His face value is 1,000 euros, with which in case of investing a greater amount it will always have to be in multiples of a thousand. He purchase price is normally inferior to nominal, so that the cost effectiveness obtained at the end of the period is the difference between what is paid for them and what the Treasury returns to us on the maturity date, which is the nominal amount requested (1,000 euros or a greater multiple thereof).
What are Treasury bonds and obligations?
They are fixed-income government debt securities at medium and long term. Bonds and debentures have similar characteristics and work the same as bills, with the difference that they have longer terms and that pay interest annually. The bonds to two, three and five years are usually auctioned first thursday of each month, while the obligations to 10, 15 and 30 years are usually auctioned third thursday of each month. Its real price may be above, below or on a par with the nominal price (1,000 euros per title). Therefore, the Treasury requests a pre deposit, which is applied to the nominal that is intended to be invested. Once the auction is held, the real price of the security is known. Your difference with the previous deposit returned to buyer a few days after the auction was held in your account without applying any commission.
How do debt auctions work?
Las offers to buy Debt in Treasury auctions can be of two types: competitive (the investor indicates the maximum price he is willing to pay for each title, although the Treasury may set a minimum) and the not competitive (in which buyers do not indicate the price, but instead accept the medium resulting from the auction). The little savers Retailers often present non-competitive offers, which is usually award the entire amount who want to invest In auctions, bids are ranked by Descending order and calculates a half price based on accepted competitive requests. Offers to buy at the minimum price are awarded at that price; requests between the minimum price and the average price pay the price they have bid; and the requests above the average price and the non-competitive ones pay said average price. In this link you can check the calendar of upcoming auctions.
Where can I buy public debt?
There are three ways to buy debt in one of the direct auctions carried out by the State. The first is the Treasury website, in the securities sale section (it is necessary to have a digital certificate or electronic DNI, this video gives the details). The second is in any of the 16 branches of the Bank of Spain (since last Tuesday, it is necessary to request appointment, on the phone 913385000 or via the web, choosing the branch and then the section “direct account operations”). And the third is through banks, companies and brokers. This third channel is the most expensive. The Bank of Spain charges 0.15% on the amount received via transfer to make the purchase effective, with a minimum of 0.9 euros and a maximum of 200 euro on the amount, a commission that is also applied to operations carried out through the Treasury. To this, the entities add another commission for his management.
What do I have to do to buy at the Bank of Spain?
Go to any branch of the Bank of Spain with appointment, provided the following documentation: the NIF and the details of the bank account in which you wish to receive the interest and capital. The payment of the amount that you want to invest can be paid by cash, check bank, or also through transfer which will be carried out no later than the day before the auction to an account of the Bank of Spain. The minimum nominal value to invest is 1,000 euros, but the money to be disbursed in the Bank of Spain is the pre deposit to be set before the auction. In the case of letters, it is currently 100%, that is, 1,000 euros per title. In the case of bonds and debentures, the prior deposit is generally set by the Bank of Spain on the Friday before the day of the auction.
What are the direct accounts of the Bank of Spain?
Direct accounts are securities accounts -not cash- open in the Bank of Spain to be able to buy and hold debt of the State acquired in the Treasury auctions. The opening of a direct account occurs as a result of the purchase at the Bank of Spain or through the Treasury website; he balance transfer securities from a bank to the Bank of Spain; or the transfer of a direct account of a deceased to his heirs. Direct accounts allow you to collect interest and principal, as well as reinvest the debt when it expires and transfer the titles before their maturity to another authorized entity. On the other hand, they do not allow you to operate in the Secondary market (purchase and sale of public debt between private investors). They are only allowed for residents in Spainwith which non-residents have to buy the debt through financial institutions.