Letras del Tesoro

Letras del Tesoro are short-term fixed income instruments which exist only in book-entry form.They were created in June 1987, when the book-entry system was established.

Bids must be made for at least EUR1,000 (Pta166,386), or a multiple of this minimum amount.

Letras are issued in auctions. These instruments are issued at a discount, which means that the purchase price is lower than the amount which will be rendered at redemption. The difference between the price rendered by the Treasury at maturity (EUR1,000) and the purchase price will be the return of the Letra.

The return on Letras del Tesoro is free from withholding tax; nevertheless, the return must be considered as part of personal income for taxation purposes (provided that the investor is a Spanish resident). Returns on Letras del Tesoro obtained by non-residents are not taxed in Spain.

 The Treasury currently issues three types of Letras del Tesoro, each one with a different maturity:

  •  Three-month Letras del Tesoro
  •  Six-month Letras del Tesoro
  •  Nine-month Letras del Tesoro
  •  Twelve-month Letras del Tesoro

As these are short-term securities, price fluctuations in the secondary market tend to be quite small; therefore, the risk incurred by investors who intend to sell Letras del Tesoro prior to maturity is usually low.
In the future, other maturities of up to 24 mounth may be issued.