Low rates and the resulting decrease in the Spanish debt’s profitability are saving the State up to €2bn in interests. The risk premium is below 100 points.
Spain has saved the Public Treasury around €2bn in debt interests, according to the Ministery of Economy. This is the saved amount with regard to prospected spendings at the State’s General Budget from the returns of debt interests on the market.
The drop of interest rates has caused this saving because interests that the State should pay to the debt buyers are fewer. In this sense, the Treasury recently marketed up to €100bn in debt with negative profitability.
The Ministry of Economy noted this fact as proof that indeed it is a change of trend not only in the economy but in the Spanish financial system itself.
Thus, Spanish ten-year-debt reached its historical minimum last Monday with 0.682 points, while risk premium decreased to 0.866 points to be placed at 99.30 points.
In such a way, both Spanish debt and risk premium are having a downward trend due to the recovery of the Spanish economy, the EFSF’s proper functioning (European Financial Stability Facility which Spain joined in 2013) and, especially, the recent ECB’s announcement of expanding its monetary policy and of implementing its debt purchasing programme.
The Spanish economy is progressively getting better although this growth needs to be consolidated and the employment keeps being a pressing priority because instability and uncertainty are still have not left the markets. However, these positive figures are showing that the Spanish economic recovery is a reality.
Henceforth, it is precisely now when more reforms are needed as well as a motive purpose to make them. It is the time for international investment to strengthen in Spain, it is the time of #embracespain.
Del Canto Chambers’ Editorial Board.