Featured statistic: EUR 27 billion
Date 25 July 2007
In the first quarter of 2007 Dutch residents issued EUR 27 billion of new long-term bonds (original maturity longer than one year) on balance, i.e. the balance of EUR 53 billion in (gross) issues and EUR 26 billion in redemptions. Gross issues thus reached the highest level since the second quarter of 2005, when gross issues amounted to EUR 59 billion.
Demand in the capital market was highest from banks, which issued bonds and notes worth EUR 25 billion , driven by a very flat yield curve making long-term funding hardly more expensive than short-term funding.
The second group, which raised EUR 11 billion in the capital market, was the sector made up of other financial intermediaries. This sector is dominated by the so-termed ‘special purpose vehicles’ (SPVs). An SPV is a company usually set up by banks to ‘securitise’ specific financial assets (like mortgages and corporate loans). In the first quarter, capital market borrowing by the central government was negative. A better-than-expected budgetary position prompted the Ministry of Finance to replace only part of the bonds that will be redeemed in 2007 with new bonds. In the first three months of the year, EUR 14 billion was redeemed, and EUR 5 billion worth of bonds was re-issued. On balance, central government redeemed EUR 9 billion in long-term bonds.