Guide to Buying Bills at 3% and Beat Deposits | markets

The end of zero rates has restored the attractiveness of fixed income. The negative returns that accompanied the market are saying goodbye and there are already many investors who are starting to look skeptically at this asset. Finding attractive returns in the short term isn’t complicated and a good example of that was the recent Treasury auction they conducted. 12-month bonds pay close to 3% while six-month debt yields 2.58%returns not seen since mid-2012 that outperformed the best deposits of the same period.

As emphasized by Secretary General of the Treasury, Carlos Cuerpo, in his presentation of the funding strategy for this yearIt is expected that with these returns, demand from investors will continue to be high. Now that the ECB has begun to reduce its debt holdings, Cuerpo is confident his position will be filled by the rest of the investors. Even though individuals at the end of 2022 had only 0.11% of outstanding debt, the returns that letters begin to provide could become a hook for small investors.

Unlike fixed-income mutual funds, individuals who want to buy bills, as well as bonds or liabilities, can do so directly. They have three options for this. The first is to resort to any branch of the Bank of Spain. Here it is enough to bring the ID (original or a copy), the details of the subscription account and the money to be invested. The amount can be paid by transfer. The second alternative is through the treasury website in the option of buying and selling securities. To do this, it is enough to have a digital certificate or electronic DNI. As in the case of buying and selling stocks, individual investors can buy bills through financial institutions (banks or savings banks) as well as stock companies or agencies. When choosing one or another alternative, the amount and commission involved in the service will be fundamental.

If the first alternative is used, the minimum nominal amount to be invested is 1,000 euros, but the money to be disbursed into the Bank of Spain is the previous deposit made before the auction. In the case of letters, today the deposit is 101%, i.e. 1010 € per address. Opening and maintaining an account with the Bank of Spain is free of charge. Commissions will only be paid in the case of cash transfers. Since January 2, 2005, commissions are set at 1.5 per thousand, with a minimum of 0.9 euros and a maximum of 200 on the amount to be transferred. In other words, buying a single treasury bond with a commission of only 1.5 euros in the Bank of Spain is a minimum rate and undoubtedly cheaper than investing in any other financial product. If you want to cancel an order before the auction takes place, it is essential to be on time. If it is executed in person through the Bank of Spain, the investor has until the day before the auction.

If the contract for billing is done through a financial company, the terms and expenses will depend on each entity. To find out more about commissions, it is advisable to go to the bank’s office. Few entities provide details of how treasury bills are contracted, with the exception of Bankinter and Santander. The purchase of bills through the entity broker headed by María Dolores d’Ancuza may have a commission of up to 0.3%, depending on the amount. The Santander broker applies a margin of 0.20% on an annual basis on the notional contracted value.

In addition to the amount and commissions, investors should keep in mind how long they can be without the money (3, 6, 9 or 12 months) and the calendar. The Bank of Spain does not allow clients to conduct operations on the secondary market. In the event that investors want to get rid of the securities before they expire, they must transfer them to the usual brokers.