The conservative investor who wants to find products with low risk and attractive returns is in luck. Treasury bills are generating returns not seen in a decade. The latest interest rate hike has made fixed income attractive. This interest was hidden in Monday’s auction, which offered 10,190 million euros and placed 5,062 million euros. Yield on 6-month bills increased compared to the previous auction to 2.693%, while the yield on 12-month bills slightly decreased and amounted to 2.839% (2.998%).

Despite this fall, Spain has one of the most lucrative public debts in Europe. But there are countries that exceed this profitability. So, Italy offers 3.024% annual bonds, while France and Portugal have values ​​very similar to those of Spain, with a return of 2.8%. On the other hand, Germany offers a lower annual debt investor reward of 2.64%. If an investor wants to invest in a country outside the European Union that offers a higher rate of return, the UK offers 3.59% on its 12-month debt.

The profitability a country offers on its debt depends on the economic situation and the stability of the place. Investing in the public debt of a country like Spain or Germany is not the same as investing in a developing country or a country with low political stability. Experts always recommend that, in addition to looking at debt yields, is to find out whether it is more or less likely that the state will default on this debt. While this is a safe investment backed by the state of a country, it must be taken into account that it will stop paying if that country goes bankrupt.

So the annual debt In Russia, the profitability is 14.14%, and in Ukraine – 41%. These are two countries that are at the epicenter of a conflict that will soon be one year old and are more at risk of not paying. Hence, the return is higher as the investor takes on much more risk. The same happens in developing countries such as Mexico, whose annual debt yields 10.9%, or Brazil, where the interest rate is 13.9%. The political conflict with the elections and the seizure of the Congress by the opposition led by Bolsonaro made investing in his debt more dangerous.

Other stable countries, both politically and economically, that offer higher yields than Spain on their short-term debt.n USA. North American Country Registers 4.86% Yield for your 12 month debt. The same interest gives debt Canada, 4.62%. If you change continent, China will offer an interest rate of 2.14% on its one-year bonds, which is less than the Spanish letter. On the other hand, Japan offers a negative yield of -0.082%.

In Spain, from 2016 to May 2022, it also had a negative yield, but in May last year, for the first time in many years, 12-month bills began to overcome the positive barrier (0.089%). A rate hike by the European Central Bank (ECB) put an end to negative profitability and instead caused it to skyrocket: at the end of 2022, total bills outstanding were paid by an average of 0.728%.

Jakob Suwalski, director of sovereign ratings at Scope Ratings, explains that Spain is well positioned to face rising borrowing costs and reduced ECB eurozone sovereign bond purchases due to the improved credit profile of the Spanish public. debt and the country’s relatively strong economic outlook.

For his part, Florian Spăte, senior bond strategist at Generali Investments, notes that government debt markets have started the year in very good shape. “Because of lower interest rate expectations, yield curves on underlying government bonds have flattened out,” he says.

From MyInvestor, they note that there are alternatives to the same security. Mutual funds, they say, are the safest category and their purpose is to act as an investor’s wallet. The risk is very low as they only invest in very high quality and very short term debt. However, the yield is also lower than other categories. Therefore, “it is important to choose a cash fund that represents the ratio of total expenses,” the bank explains.