Infrastructure and sustainable long-term debt structure (7.9 years), 5 bonds tied to Marks & Spencer.

ownership (the Bank of Spain held 28% of government bonds in the second quarter of 2022) and significant deposits, amounting to about 12% of GDP. These factors offset increased issuance costs and support the sustainability of government debt.

In addition, effective real interest rates, which take into account the real cost of borrowing adjusted for inflation, are expected to remain reasonable compared to previous decades. The difference between real interest rates and growth in Spain is projected to remain negative in the following years (on average -2.0% between 2023 and 2028). Given Spain's growth prospects relative to interest rates, there is no need for immediate fiscal consolidation measures,''which could hamper growth. In addition, the use of EU recovery funds gives governments the flexibility to manage public finances without compromising economic growth.

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Rising interest rates in the eurozone are forcing governments to manage debt effectively, which underscores the importance of tax reforms to ensure increased social spending and environmental investment.

Predictions for bond yields

In the near term, we forecast relatively stable yields for bonds with short-term maturities due to expectations of a moderate rise in short-term interest rates. However, for longer-term yields, there is potential for upward pressure. This is due to the general''market sentiment and the outlook for higher interest rates over the longer term. Factors such as inflation expectations, central bank policy and economic outcomes will have a significant impact on the trajectory of bond yields over the longer term. While we cannot predict with certainty, it is prudent to be alert to a possible rise in long-term yields as we approach year-end.