Spain Reduces Public Debt Issuance for 2025 Amid Robust Economic Indicators
Spain's Treasury announces a €5 billion reduction in public debt issuance for 2025 amid positive economic trends.
- • Spain cuts public debt issuance from €60 billion to €55 billion for 2025.
- • The reduction is due to stronger tax revenues and economic health.
- • Debt at 16% of GDP is the second-lowest since 2012, with interest costs around 2% of GDP.
- • Increased non-resident investment and improved credit ratings bolster market confidence.
Key details
Spain's Treasury has announced a significant reduction in its public debt issuance for 2025, lowering the net amount from an originally planned €60 billion to €55 billion. This revised issuance consists of €50 billion in bonds and obligations, with the remainder allocated to treasury bills. According to the El País report, the decision comes on the heels of increased tax revenues reflecting a strong economic performance despite ongoing high inflation rates. Factors contributing to this uplift include augmented VAT income, a boom in housing sales, and record employment levels which have allowed the government to meet its fiscal responsibilities with reduced market borrowing.
Additionally, the reduced debt issuance for 2025 aligns with the figures for 2024, maintaining gross debt at approximately 16% of GDP—the second-lowest ratio since 2012—signaling stabilizing debt sustainability. Interest expenses are forecasted to remain around historic lows, at approximately 2% of GDP. The Treasury has already executed 83% of the planned emissions for 2025, with smaller auctions scheduled to occur in the last quarter of the year.
The report indicates that non-resident investors have shown increasing interest, having raised their holdings of Spanish medium and long-term debt by over €180 billion since 2022, now totaling 47% of the country’s total debt. Additionally, Spain's credit ratings have been upgraded, with the risk premium dropping below 55 basis points for the first time in 18 years.
With an average cost of outstanding debt at 2.29% and a median maturity nearing eight years, Spain's public debt currently stands at 102.3% of GDP, a decrease of 1.9 points from the previous year. Projections suggest this figure will further fall to 101.7% by late 2025, on the way to reaching 90.6% by 2031. This comprehensive reassessment illustrates the government's adaptability and strategic maneuvering in the face of economic challenges, reaffirming investor confidence in the Spanish economy.