The Kingdom of Spain has quadrupled its net issuance forecast for 2020 to €130bn, Pablo de Ramon-Laca, director general of the treasury and financial policy, said on a call with investors on Friday.
Like other sovereigns, Spain is having to deal with the coronavirus pandemic and its economic repercussions.
The announcement emerged on the same day Austria said it was more or less doubling its 2020 funding programme to around €60bn from the previous €31bn-€34bn estimate.
"Having announced €32.5bn, we have revised this to €130bn, so it's a €97.5bn increase," Ramon-Laca said.
"There are two ways we can do this. We could issue a lot of T-bills, that is the way some countries have gone. But having been through a crisis before, we believe it's wise to split more heavily towards medium and long-term rather than short-term issuance."
Of the extra €97.5bn, Spain will raise €68.5bn in medium to long-term debt with €29bn coming from T-bills.
"The inertia of the interest burden is favourable to Spain precisely because in 2010-2011 our cost of funding was so high," he said.
"Right now, it has an inertia to fall because if rates are lower, bonds issued in those years disappear from our portfolio and are replaced by lower yielding new bonds. So the interest will go down even though our funding will go up to €130bn."
He said Spain's average cost of funding so far this year was 0.31%, and its cost of outstanding debt had fallen below 2%.
Spain was last in the market in April, selling a record-breaking €15bn 10-year on books of over €97bn. It printed at a yield of 1.306% and has since rallied to 0.55%, according to Refinitiv data.
Ramon-Laca also gave an update on the country's long-awaited green bond project.
"It's still within our short-term plans but whether it can happen or not in 2020 depends on many factors, least of all completing the programme, but it's still very much a priority," he said.
"Whether or not it can be done this year depends on when we have a budget. Green bonds have to be backed with an explicit government strategy."
Spain is currently rolling over the 2018 budget, which does not include the green strategy the government is pushing forward.
"It's still a big priority," he said. "At the DMO, we took a long time to be convinced of the green market but we now think the market is ripe to engage, we think there is sufficient investor diversification and sufficient agreement within the Spanish population that this is a priority."
The country is unlikely to visit the US dollar market to raise the extra funding, Ramon-Laca said.
"We think there are sufficient savings in euros to meet all of our needs," he said. "If we do US dollars, it's because it is to the advantage of the Spanish taxpayer. There is an ample, deep and very committed euro-area debt capital market to issue into. If we engage in dollars, it will be opportunistic and based on cost rather than diversification."