MNI INTERVIEW: Spain Attracting Investors Despite Budget Delay

Spain's difficulty in passing a budget does not detract from the country's growing attraction to international investors, the Spanish Treasury's Deputy Head of Funding and Debt Management Rocío Trueba Miralles told MNI.

"The macro and the fiscal situation in Spain is very positive," and recent credit rating upgrades have boosted the attractiveness of Spanish government debt, she said afterwards in an interview.

"The lables we had before, about periphery and semi-core, that no longer works" for investors, she added, as investors view countries in the periphery are more attractive. (See MNI: Portugal Sees Improving Foreign Demand For Bonds)

She said the long end was no longer an obvious place for the Spanish treasury to issue bonds.

"The main challenge we face is the tradeoff between average cost and average maturity," she had said in a speech at the AFME conference in Brussels, "becasue in the past decade we didnt have that tradeoff because of the very flattened curve and the very low rates in the long end." 

She expects "volatility at the long end of the curve," because of the European Central Bank's quantitative tightenting programme, geopolitical factors and uncertainty about where interest rates will settle.

The average maturity of new issuance in 2025 decreased to 9.5 years from slightly over ten years.

DUTCH PENSION REFORMS

"We don't have natural demand" from the domestic market in the long end of the curve, she said, but "now we receive more demand from non-residents, which we didnt have before, so that explains why the Spanish curve is doing relatively well at the long end."

Recent Dutch pension reform could also improve demand for Spanish debt. "They can now buy riskier assets, which are not AAA or swaps, but single A."

The issuance plan is expected "by the end of the year or the beginning of the next one," and she expects "no big changes" from this years funding programme.