The profitability offered by Letters has reached maximum levels in the last year, driven by due to the increase in interest rates of the European Central Bank (ECB). On December 12, the Treasury placed In the last auction of 2023 a total of 1,741.97 million euros in 3 and 9 month bills. In 2023, the Treasury raised the 3-month yield and cut the compensation offered to investors for the 9-month benchmark. Bond placements have already been relaunched this year.
The results of the Bank of Spain showed that, while partially reducing the interest offered for issuing letters, the high levels of profitability have maintained the desire to invest. Now it’s the turn of 2024, when the appetite of “investors” is expected to continue, especially that of individual investors.
Anyone who wants to continue betting on this type of investment can start with the auction which will take place next January 9th, Letters at 6 and 12 months.
Letters at 3 and 9 months
The first auction of 3 and 9 month letters of this year 2024 will be held instead next January 16th.
In these new events, there could once again be a decline in profitability linked to the halting of the increase in interest rates by the European Central Bank (ECB) after months of increases in yields.
What are treasury bonds
Treasury bills are short-term fixed income securities issued by the public treasury. These are 3, 6, 9 and 12 month debt securities with very little risk that the State puts on the market to obtain financing.. Each of these Letters has a nominal amount of 1,000 euros and this would be the minimum investment amount, although it can be increased by investing multiples. Since it is a fixed income, profitability is guaranteed and therefore the buyer is guaranteed the profits that he will obtain at the expiry of the term.
How to buy Treasury bonds
The Treasury auctions the securities every month, in separate sessions, for durations of 6 and 12 months on the one hand, and 3 and 9 months on the other. To purchase them, the first step is to log in to the Public Treasury website and open a “Direct Account” at the Bank of Spain. If you have an electronic DNI or a digital certificate, the customer will be able to make the purchase directly via the internet, selecting the security he wishes to purchase in the ‘Purchase and sale of securities’ section and transferring the amount. Another option is to go in person to a Bank of Spain branch by making an appointment, which can be made online.
What is the profitability of Treasury bonds?
Citizens do not know what profitability the bonds will offer in the next auction when they make a purchase proposal, so there is the possibility of indicating the minimum interest rate pthat is, those who are willing to make the purchase, but run the risk of being excluded from the auction if it closes at a lower rate. Most buyers choose to make non-competitive bids and keep the price indicated in the auction, without imposing conditions.
What is the amount of each Treasury bill?
The nominal amount of each Letter is 1,000 euros, therefore the investment will always be this amount or a multiple of it. Treasury bills do not follow the same interest collection system as other savings products, since they are discount issues. This means that, at the time of issuance, these securities are purchased at a price lower than the nominal price, receive the 1,000 euros in payment at the time of maturity, the difference between the two amounts will constitute the profitability obtained. For example, if you buy a 3% banknote, you will pay 970 euros at the time of purchase at auction, for which the Treasury will subsequently return 1,000 euros.
Price of Treasury bills
If it is necessary to recover the money invested before the end of the established amortization period, the Letters can be sold without having reached maturity, but the client may lose money depending on how the rates offered by the Public Treasury have advanced since their purchase. If the Letter has been acquired with a lower profitability than that offered by the public body At the time of sale, the price you will be willing to pay for the security on the secondary market will be lower than that of the initial purchase.
How to declare profits obtained in Letters
Profits obtained from these types of issues are considered returns of capital and are, therefore, subject to personal income tax (IRPF). The same tax will be applied as any savings income, depending on the amount obtained. Therefore, the first 6,000 euros will have a rate of 19%, between 6,000 and 50,000 euros it will be 21%.23% between 50,000 and 200,000 euros and 28% for amounts higher than this last figure.
First debt auction of the year
The Public Treasury will hold its first debt auction of the year this Thursday with the intention of raising between 5,750 and 7,250 million euros in bonds and bonds. The auction takes place after the appointment of the former Secretary General of the Treasury and International Financing, Carlo Corpoas Minister of Economy, Trade and Business.
2024-01-07 00:14:36
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