Domestic debt securities portfolio increased by EUR 55 billion during the coronavirus crisis

Ongoing purchases of domestic debt securities

In March, April and May 2020 Dutch investors purchased domestic money market and capital market paper (bonds) to a total net amount of EUR 55.2 billion. Most purchases were made in April (EUR 38.2 billion). In March 2020, investors also made large domestic purchases (EUR 9.3 billion). Purchases in May amounted to EUR 7.7 billion. Before the coronavirus (COVID-19) crisis, Dutch positions were reduced. January and February 2020 saw net sales of EUR 5.1 billion and EUR 0.2 billion respectively. This appears from preliminary DNB figures based on reports covering approximately 85% of Dutch securities holdings (Figure 1).

While purchases continued to grow during the coronavirus crisis, the portfolio of domestic debt securities grew from EUR 406.2 billion to EUR 456.7 billion (+12.4%), measured at market value, including monetary positions but exclusing accumulated interest.

Monetary operations and large-scale debt issues as key drivers?

An explanation for the growth of the domestic debt securities portfolio could be found in the monetary support operations, such as the ECB's pandemic emergency purchase programme (PEPP). On balance, the purchases of Dutch public debt securities by DNB and the ECB in the context of the monetary support operations amounted to EUR 13.6 billion. DNB was responsible for the larger share of these purchases.

Another explanation for the large purchases of Dutch debt securities is the volume of Dutch debt issues by both the Dutch government and the private sector. Total net issues amounted to EUR 106 billion during the pandemic, compared to EUR 20.4 billion in the same period a year before.

The large purchases of Dutch debt securities during the coronavirus crisis can only partly be explained by the sale of foreign debt securities. Dutch investors sold foreign money market and capital market paper worth EUR 9.5 billion in April, while their net purchases of foreign debt securities in May amounted to EUR 5.5 billion. However, a combination of price movements (EUR -18.2 billion) and exchange rate movements (EUR -5.0 billion) during the coronavirus crisis caused the portfolio of foreign debt securities to decrease from EUR 761.4 billion at the beginning of March to EUR 722.5 billion by the end of May 2020 (-5.1%)