La profitability offered by T-Bills hit highs during the last year, driven by the rise in interest rates of the European Central Bank (ECB). The Treasury Public placed on December 12, at the last auction of the year 2023, a total of 1,741.97 million euros in Bills at 3 and 9 months. In 2023, the Treasury increased the return on 3 months and cut the remuneration offered to investors for the 9 month reference. Bond placements have already been relaunched this year.
The results of the Bank of Spain showed that, despite partially reducing the interest offered in the issuance of Bills, the high levels of profitability maintained the desire for investment. Now it’s the turn of 2024, when ‘investor’ appetite is expected to continue, especially that of individual investors.
Individuals who want to continue betting on this type of investment can start with the auction to be held January 9 for Bills at 6 and 12 months.
Bills at 3 and 9 months
On the other hand, the first auction of Bills at 3 and 9 months of this year 2024 will take place on January 16.
In these new appointments, a drop in profitability could occur again linked to the halt in the rise in interest rates of the European Central Bank (ECB) after months of rising yields.
What are Treasury Bills
Treasury Bills are short-term fixed income securities issued by the Public Treasury. These are debt securities at 3, 6, 9, and 12 months with very little risk that the Government brings to the market to obtain financing. Each of these Bills has a nominal amount of 1,000 euros and this would be the minimum investment amount, although it can be extended, investing multiples. Being fixed income, profitability is guaranteed and therefore the buyer has the gains that will be obtained at the end of the term insured.
How to buy Treasury Bills
The Treasury auctions Bills every month, in separate sessions for maturities of 6 and 12 months, on the one hand, and 3 and 9 months, on the other. To buy them, the first step to follow is to access the website of the Public Treasury and open a ‘ Direct Account’ at the Bank of Spain. If you have an electronic ID or digital certificate, the customer can make the purchase directly through the internet, selecting the value to be acquired in the ‘Purchase and Sale of Securities’ section and transferring the amount. Another option is to go in person to a branch of the Bank of Spain with a prior appointment, which can be arranged on the internet.
What is the profitability of Treasury Bills
Citizens do not know what the profitability of the Bills will be in the next auction when making a purchase offer, so there is the option of indicating the minimum interest rate for which you are willing to make the purchase, but you run the risk of being left out of the auction if it closes with a lower rate. Most buyers choose to make non-competitive offers and stick with the price that comes out in the auction, without imposing conditions.
What is the amount of each Treasury Bill
The nominal amount of each Bill is 1,000 euros, therefore the investment will always be of this amount or a multiple of the same. Treasury Bills do not follow the same system to receive interest as other savings products, since they are issuance at a discount. This means that, at the time of issue, these securities are acquired at a price lower than the nominal one, to receive 1,000 euros as payment at the time of maturity, the difference between the two amounts being the obtained profitability. For example, if a Letter is purchased at 3%, 970 euros will be paid for it when purchasing it at auction so that the Treasury will return 1,000 euros afterwards.
Price of Treasury Bills
In case of needing to recover the money invested before the end of the established maturity period, the Bills can be sold without having reached their maturity, but the customer could lose money depending on how the rates offered by the Public Treasury have advanced since their purchase. If the Letter was acquired with a lower return than that offered by the public body at the time of sale, the price that will be willing to pay for the title in the secondary market will be lower than that of the initial purchase.
How to declare the profits obtained in the Bills
The profits obtained from this type of issuances are considered income from movable capital and are therefore subject to Personal Income Tax (IRPF). The same levy will be applied as to any saving income, depending on the amount obtained. Thus, the first 6,000 euros will have a rate of 19%, between 6,000 and 50,000 euros it will be 21% from 23% between 50,000 and 200,000 euros and 28% for amounts that exceed this last number.
First debt auction of the year
The Public Treasury will address its first debt auction of the year this Thursday with the intention of capturing between 5,750 and 7,250 million euros in bonds and obligations. The auction is held after the appointment of the former Secretary General of the Treasury and International Financing, Carlos Cuerpo as Minister of Economy, Trade and Business.
In resumen, las Letras del Tesoro continúan siendo una opción atractiva para los inversores, con una rentabilidad garantizada y un bajo riesgo. Si estás interesado en comprar Letras del Tesoro, recuerda que se puede hacer a través de la página web del Tesoro Público. También debes tener en cuenta que las ganancias obtenidas estarán sujetas al Impuesto sobre la Renta de las Personas Físicas (IRPF). Mientras tanto, el Tesoro Público está preparándose para su primera subasta del año, lo que puede ofrecer oportunidades para los inversores. No dudes en mantenerte informado sobre las subastas y posibles cambios en la rentabilidad de las Letras del Tesoro.
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