Transcript: Interview with Spanish Debt Management Deputy Director General Mercedes Abascal on 24 September 2025
30 September 2025
By Marta Vilar – MADRID (Econostream) – Following is the full transcript of the interview conducted by Econostream on 24 September 2025 with Mercedes Abascal, Deputy Director General of Public Debt Management at the Spanish Treasury.
Q: The market is anticipating another syndicated deal from the Spanish Treasury in the near term. What can you share with us about that?
A: As of now, we are already well advanced in this year’s issuance program, having completed more than 80%. Thanks to the strong demand in the first three syndications, we were able to issue higher volumes, which means we no longer expect to launch any further syndications this year. The larger amounts raised earlier have already covered our needs.
Q: What was behind the decision not to launch another syndicated deal? Was it solely because earlier transactions already covered the needed volume, or were there other factors at play?
A: There are a few reasons. Typically, we have three well-defined syndicated benchmarks each year: two 10-years and, alternating annually, either a 15-year or a 30-year. This year we issued the 15-year. The fourth benchmark is usually more flexible (sometimes a linker, sometimes a 20-year, or another maturity), but this time there was not a clear candidate. In addition, demand for the first three syndications was particularly strong, so we opted to increase volumes there. Given the current global uncertainty, it made sense to lock in funding while market appetite was high.
Q: Do you expect this “wait-and-see” approach to syndicated deals to continue into 2026, or will you revert to the usual pattern?
A: Our plan is to maintain the standard pattern of four syndications per year. We do allow for some flexibility, but unless there’s a compelling reason to deviate, we intend to stick with four. As always, we will review the approach with our primary dealers next year, but the baseline remains four.
Q: Between now and year-end, should markets expect anything new in terms of issuances not included in the official calendar?
A: No. We will continue with the regular auctions already scheduled on the calendar, and given how far ahead we are, we don’t anticipate any surprises for the remainder of the year.
Q: For future syndications, are you considering innovating with an ESG format, for example, reopening the green bond via syndication?
A: We reopen the green bond through auctions, gradually building it up until it reaches a sufficient volume to justify issuing a new one. This year, there is still one auction to go, with about €3.5 billion issued per year. By year-end, the outstanding volume should reach 18 billion, leaving room for further reopenings next year. Looking further ahead, we do plan to launch a new green bond, but only once the current one is fully built up to ensure strong liquidity, which is essential.
Q: So, you wouldn’t reopen the green bond with a syndicated tap. Right?
A: Right.. It already has sufficient liquidity, so a syndicated tap is not necessary. We reserve syndications for launching new benchmarks. In addition, the green bond carries a 1% coupon and trades well below par, so paying syndication fees for proceeds significantly under nominal would not be justified.
Q: More broadly, what should we expect from the funding strategy for next year? Will it be in line with this year?
A: Yes. Our goal is to remain predictable and transparent, so we don’t foresee major changes. We are still working on next year’s issuance strategy and assessing 2026 funding needs, but overall we expect it to look much like recent years: similar issuance volumes, a comparable mix of bonds and bills, and a steady share of syndications within the medium- to long-term program. In short, no surprises.
Q: Will you reinforce any particular part of the curve, as you have with the 10-year?
A: The 10-year is our benchmark reference and the most in-demand maturity. That’s why we syndicate it twice a year: it fills up quickly through auctions, and we need to keep it refreshed as a proper 10-year benchmark. At the same time, we must ensure liquidity across the entire curve. For instance, we aim to issue a new 30-year every two years. This year we issued a 15-year, and next year the plan is for a 30-year. The 5-year still has room to grow through auctions, but eventually we’ll also introduce a new one.
Q: In 2025, some sovereigns have adjusted their issuance strategies toward shorter maturities amid rising long-end yields. Could Spain also increase the share of short-term issuance in 2026?
A: We adjust to market conditions. While yield curves have steepened everywhere, the effect in Spain has been milder thanks to stronger long-end demand, so our shift toward shorter maturities has been more moderate. In 2025 so far, the average maturity of medium- and long-term issuance has fallen by about a year to 9.5 years, from 10.5 in 2024. During the pandemic we extended to around 11 years, but with today’s higher long-term rates, further extensions no longer make sense. At the same time, we are issuing more short-term bills, with positive net issuance for the first time in years. Overall portfolio maturity is still close to 8 years, as long-dated recovery fund loans offset shorter issuance, though it has edged down slightly.
Q: Should we expect you to continue shortening the average maturity of your total portfolio?
A: We’ll continue adapting to market conditions. With long rates rising more than short rates this year, we shortened average maturity and will stay flexible if that continues. Still, we don’t plan drastic changes — we remain committed to liquidity across the curve, including the long end, where investor demand is strong. While sovereign markets globally are shifting toward shorter durations, in Spain long-end demand remains solid, so our adjustment is more moderate.
Q: Let’s talk about inflation-linked bonds. How do you view recent auctions, and do you plan to reopen existing lines or launch a new one?
A: We currently have five outstanding references maturing between 2027 and 2039. With the new linkers issued in 2023 and 2024, the offering is sufficient to cover current demand. Bid-to-cover ratios have improved compared with last year, despite similar issuance volumes. The two most recent bonds, with €7 billion and €5 billion outstanding, still have room for additional reopenings through auctions. So for now, we are not planning a new linefor the near future
Q: Last year, Spanish Treasury Director General Carla Díaz told Econostream that no new green bond would be considered until the 2021 issue reached €20 billion in size. Do you still share that view, and if so, when do you expect to reach that threshold?
A: The bond’s outstanding volume is currently about €17.3 billion, with one more auction scheduled this year. It should surpass €18 billion by year-end and exceed €20 billion next year, as each year adds €3-3.5 billion. On that basis, we could think of a new green bond from 2027.
Q: Though it’s still early, what maturity should we anticipate for the new green bond?
A: It’s still too early to say, as we need to assess where demand for green bonds is most concentrated. That said, the most likely option would be a long-dated bond in the 15- to 20-year range, which is typically the case. We will review the situation when the time comes, but that approach seems the most sensible.
Q: With the new European Green Bond Standard (EuGB) now in force, do you plan to align future sovereign green issuance with that framework?
A: Yes, our plan is to update the green bond framework when we launch a new line, so that the new bond aligns as far as possible with the best standards, while the existing bond remains under the current framework to avoid any confusion.
Q: Concerning the Spanish government’s planned €80 billion write-off of regional debt, will this have any impact on your issuance?
A: It’s still just a draft bill, and most of the debt involved is what the regions owe to the State, so cancelling it is largely an accounting exercise with no impact on Treasury issuance. The loans already have long repayment schedules, and maturities are refinanced through the Regional Government Fund, so the effect is essentially neutral. The only meaningful impact is from the share of regional debt held with third parties, which will depend on how many regions adhere to the measure. Assuming all the regions join it, it would be about 20% of the total write-off, so the effect will be limited and phased in gradually. Market reaction has been negligible, with no effect on bond pricing, and the aim is to strengthen regions’ fiscal positions so they can return to markets in better shape.
B: Spain is outperforming other major economies. Are you seeing this reflected in stronger investor appetite for Spanish debt?
A: Yes. Since the ECB ended net asset purchases, the key question was who would step in to replace them. We have observed a strong increase in demand from foreign investors: since the start of 2023 until now, their holdings of Spanish bonds rose by more than €175 billion. This is a very positive trend that broadens and diversifies our investor base. In syndications, where we track geographical participation, we have seen demand not only from Europe but also increasing interest from the Nordics, Asia, and the Middle East.
Q: Does this shift in demand from foreign investors change your strategy in any way?
A: Not in a fundamental way. Investors place high value on predictability and transparency. We adjust flexibly at each auction, consulting with our primary dealers to see where demand is strongest or where additional liquidity is needed. But overall, the strategy remains unchanged.
Q: Did you see any spillovers to Spain from the recent rating actions and spread movements related to France?
A: No, not at all. Spain’s curve has been resilient, even tightening spreads against Germany. Investors are doing more country-by-country analysis, looking at fundamentals. In fact, Spain’s rating upgrade by S&P also had little immediate market impact, because the market had already priced it in. The spread tightening from around 100bp in early 2024 to about 55bp now has been a gradual process over the last two years.