Belgians collectively subscribe for 21.896 billion euros to the one-year state bond

Belgian households and singles found plenty of ways towards subscribing to the one-year state bond last week. That subscription period ran from Thursday 24 August 2023 to Friday 1 September 2023. This is what Minister of Finance Vincent Van Peteghem announces at the instigation of the Belgian Debt Agency.

234,310 people subscribed directly through the Ledger of the Belgian Debt Agency, accounting for 7.093 billion euros. The average amount of subscription to a state bond at the Agency thus amounts to 30,272 euros. The more than 400,000[1] subscriptions through banks account for 14.803 billion euros.

That brings the total amount of this state note issue to 21.896 billion euros. That makes this state bond issue the most successful issue in Belgian history. Minister Van Peteghem is pleased that so many Belgians found their way to this safe investment, which ensures a gross return of 3.30%. It shows that Belgian savers are looking for a return higher than what is offered today by banks on traditional savings books.

"The success of the issue of the one-year state bond shows that our households and singles yearn for a higher and safe return on their savings. The one-year state bond, therefore, aimed to boost competition within the banking sector. Both the success of the issue, rate changes by some banks and increased demand from savers for products other than the savings book contribute to this goal. But above all, it is a powerful signal and a clear call for respect from Belgian savers towards the banking sector. It is now up to the banking sector to heed this signal and thus regain the trust of their savers. People showed confidence in the state during this issue, they can therefore count on the government to follow up closely on this file in the coming period to ensure competition within the banking sector."
Deputy Prime Minister and Minister of Finance, in charge of the Coordination of the Fight against Fraud and in charge of the National Lottery

1. Implications for the 2023 financing plan
As already announced by the Agency on 1 September 2023, the planned issue of certain treasury certificates will not go ahead in the next few weeks. Thereafter too, treasury certificate issues will either be cancelled or scaled back. In all, the Agency will reduce treasury certificate issues by 10.4 billion euros in 2023.

The remaining 2023 medium- and long-term debt issues will also be reduced, by 2.25 billion euros, to 45.0 billion euros. The Agency will additionally maintain a higher cash position. The increase in that cash position would amount to some 9 billion euros.

2. Impact on debt portfolio structure and risks
The average duration of the debt portfolio will decrease slightly against its expected values for the near future, and this because of the 2.25 billion euro reduction in long-term funding. Since this risk parameter is calculated on the basis of net debt, it will not undergo any further change. Refinancing and refixing risks would also only increase to a very limited extent, for the same reason.

3. Decrease in spread lowers our financing cost of our long-term debt
The Agency notes that the interest rate differential of the linear bonds with those of countries such as France and Germany has dropped by 3 to 4 basis points in the past few days, as a result of the diversification of its financing via state bonds, which will allow it to save on the interest cost of the linear bonds to be issued in the near future. For this year's remaining issues, interest savings of 2.1 million euros a year will thus be obtained, or a further 21 million euros over the next 10 years. If this reduction in interest rate differentials continues next year, the savings will amount to an additional 15.2 million euros per year, or a further 152 million euros over the next 10 years.

"I expressly thank the Belgian Debt Agency and its staff for their professionalism and expertise during this issue. In consultation with the Agency, we will consider which state bond issues are opportune in the coming months to achieve both the Agency's and the government's objectives. Finally, I would also like to thank all the employees of the participating banks who were responsible for smoothly assisting their customers in subscribing to the state note."
Deputy Prime Minister and Minister of Finance, in charge of the Coordination of the Fight against Fraud and in charge of the National Lottery