The Treasury foresees that the cost of the debt will be low even if interest increases By EFE

Madrid, Oct 26 (.) .- The Public Treasury foresees that the average cost of the debt will maintain its current trend and will continue at historically low levels, although the interests of the debt placements made by the State increase in the coming years.

The Secretary General of the Treasury and International Financing, Carlos Corps, has explained in the Budget Commission of the Congress of Deputies that the financial burden of the State (current emissions plus those of other years) “is subject to a strong downward inertia” , if future issues are made at a lower interest than the average of the debt that matures.

“Right now we are at an all-time low (of the average cost of debt), 1.63%, and this trend is expected to continue even if issuance costs increase in the coming years,” he said.

According to the draft general state budget (PGE) for next year, the average cost last August was 1.66%, compared to 1.86% in 2020.

To illustrate the inertia in the medium term that the debt has, Corps has indicated, by way of example, that next January the State will face the maturity of 23,000 million euros of a 10-year obligation, with a coupon of 5.85% issued in 2011.

The last ten-year debt issue to date by the Treasury, on October 7, closed with a marginal interest rate of 0.456% and a coupon of 0.5%.

In addition, the secretary general has indicated that the financial burden measured in terms of GDP is around 2%, which allows a path of stable and sustainable debt reduction with a forecast of growth of the economy in the medium term close to that percentage.

Corps has also highlighted the Treasury’s strategy to extend the life of the debt, which in 2022 will close in about 8 years, as another key element to face the change towards a more restrictive monetary policy of the European Central Bank (ECB).

“The Treasury is prepared for the normalization of monetary policy by the ECB,” he assured.

The 2022 PGE foresees gross issues of 242,846 million euros, 9.8% less than this year, and net of 80,000 million, the same as in 2021. Most of it, 90%, will be made through bonds and debentures .

Financial expenses, which are 97.5% interest on public debt, provided for in the PGE amount to 30,223 million, 4.7% lower than those of 2021.

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