Spain’s Treasury Chief Inigo Fernandez de Mesa said it’s on the look-out for opportunities to broaden its investor base and lengthen maturities as confidence in the euro area has made Spanish debt easier to sell abroad.
“To diversify the investor base is an important mid- and long-term strategy and we don’t rule out any type of funding,” Fernandez de Mesa told reporters in Madrid, where secondary-market government debt trading for retail investors was started today.
Spain’s Treasury is open to additional foreign-currency bond issuances as well as sales of inflation-linked securities and longer-dated debt, he said.
While the Treasury has covered a third of its planned mid-and long-term funding for 2013 in the first quarter, its needs are higher than last year. The government has requested the European Union to give it more time to cut its budget deficit as it struggles to haul the euro region’s fourth-largest economy out of its second recession since 2008.
“There has been a change of trend with an increase in foreign investors’ interest,” Fernandez de Mesa said. “We are looking at the markets continuously, looking out for opportunities and the best moment.”
While banks will remain the government’s main debt holders, the Treasury said it aims to boost retail investor demand. The new platform, which started trading today, aims to facilitate transactions due to the current lack of liquidity on secondary markets, he said.
The yield on Spain’s 10-year benchmark bonds fell one basis point to 4.74 percent at 3:21 p.m. in Madrid. That compares with a euro-era high of 7.75 percent in July before the European Central Bank pledged to support the single currency. The spread with similar German maturities narrowed three basis points to 3.51 percentage points.
Fernandez de Mesa expressed optimism on Spanish debt’s outlook. “The secondary market continues to be very stable, volatility has fallen significantly,” he said. “Europe is better equipped with tools to face potential crisis that may emerge, there is a combination of domestic and European actions that have generated a substantial increase in market confidence.”
Regarding the regions, the Treasury chief said the state’s rescue-fund has the means to supply funding to those that need it and that the others have had no difficulty in accessing the market within limits set by the Treasury, with a maximum spread of 100 basis points over its own benchmark securities.