The treasury department raised more money at lower costs yesterday thanks to an incredible demand for Spanish debt. Not only widespread publicity led to the record sale, but higher interest rates on deposits have built a decisive demand amidst doubts that another historic record would be set: year-to-year first quarter figures for savings deposits in financial products fell for the first time.
The attractiveness of notes could cannibalize demand for other asset classes and exacerbate the flight from deposits, stocks and fixed income, among other investments. Public sector financing has eaten into private investments, something less than convenient for our private banks that have seen their business hit hard in Spain.
And let's not forget that while the treasury's recent issue was priced low, it will eventually be more expensive than what is desired.
