It was in July last year that Savings Certificates, after almost three consecutive years with a stagnant stock of around EUR 12 billion, jumped to their heyday, driven by the rise in the three-month Euribor, as a result of which the remuneration of that product reached its maximum of 3.5%, supplemented by permanence premiums of up to 1%. Since then, these government debt securities have been gaining ground among households, with total savings of EUR 33.2 billion in June – an increase of 157% compared to the same month of 2022.
However, the most recent statistics from the Bank of Portugal (BdP) show that while savings bonds have maintained a high pace, picking up nearly EUR 13.6 billion in Portuguese savings since the beginning of the year (69% more than at the end of December), last month’s issuance slowed down: in May the increase was EUR 2.2 billion, in June the strengthening in this product was only EUR 670.3 million, reflecting a 70% decline.
The slowdown observed in the sixth month of the year is related to the fact that it was precisely at that time that the government suspended the Série E and launched a new one, with less favorable conditions, based on the need to “realign the remuneration of savings bonds with the remuneration of the other sources of funding of the Portuguese Republic”, the Treasury explained at the time. Although also indexed to the three-month Euribor, the F Series, created on 2 June, has a maximum cap of 2.5% and a longer term, accompanied by permanence premiums of up to 1.75% (above 1%, only from the 12th year).
On the other hand, Treasury bills, another government debt instrument, fell for the 20th consecutive month in month six, a difference of EUR 222 million compared to May. Since October 2021, these securities have been losing capitalization, with the EUR 17.8 billion for the period having shrunk to EUR 12.3 billion in June, representing a 31% drop, which is EUR 5.5 billion less.
If we add up the stocks of both certificates, it appears that households have currently invested around 45.5 billion euros in government savings products. This means that 16% of the national debt – which amounted to 280 billion euros in May – is held by private individuals.
Savings bonds increase the debt of the economy
Combined household, corporate and state debt rose by €1.6 billion in May, bringing the economy’s total debt to €804.4 billion, a record figure, according to data released yesterday by the Bank of Portugal.
The new ceiling was mainly extended on the side of the public sector, whose debt increased by 1.1 billion euros to 363.9 billion. The increase mainly occurred among private individuals (1.7 billion euros), due to the investment in savings certificates, and among public authorities (1 billion euros). Conversely, the debt of public services and public companies abroad fell by 1.4 billion euros and that of the financial sector by 0.4 billion euros.
According to calculations by DN/Dinheiro Vivo, non-financial public sector debt increased by 2% year-on-year and 0.3% in the month analyzed compared to April.
As for the private sector, which includes companies and households, debt increased by €500 million to €440.6 billion – that is, it remains the segment that carries the largest weight in the economy’s debt burden.
Still with the fifth month of 2023 as a backdrop, while the amount private companies owed totaled €500 million, to €288.8 billion – “essentially an increase over the outside world (300 million) and the financial sector (€200 billion)” – private debt did not change significantly compared to April and stood at €151.7 billion.
Looking at BdP figures, private corporate debt fell 0.1% compared to the same month of last year and rose about 2% compared to April, while private debt increased 1% compared to the same period last year.
Mariana Coelho Dias is a journalist for Dinheiro Vivo
Source: DN
