In the second quarter of 2014, total net issues of both short-term and long-term debt securities by Dutch residents ran to EUR 34 billion (up 19% from Q1). The outstanding amount of short-term and long-term debt securities increased by 2.9% quarter-on-quarter (q‑o‑q) to a record EUR 1,809 billion (about triple the size of the Dutch GDP).
Capital market issues remain high
The second quarter of 2014 saw continued high issues of Dutch bonds (EUR 94 billion; -3% q‑o‑q). A major part of this amount was raised as new financing. Redemptions were comparatively low (EUR 64 bn; -20% q‑o‑q). The total volume of outstanding bonds grew 3% q‑o‑q to the record high of EUR 1,672 billion. In the euro area, bond issues also continued apace (EUR 799 bn; +5% q‑o‑q) amid lower redemptions (EUR 707 bn; -8% q‑o‑q). As a result, the value of outstanding bonds in the euro area rose to EUR 15,212 billion (+8% q‑o‑q).
Figure 1: Quarterly issues of Dutch bonds (in EUR bn)
The growing level of debt on the capital market is largely explained by the borrowing requirement of the Dutch central government. The central government effected net bond issues of EUR 10 billion. Total outstanding long-term government bonds rose to EUR 333 billion (+3% q‑o‑q).
In the second quarter of 2014, as in the previous quarter, banks increased their bond issues (EUR 30 bn; +29% q‑o‑q). For the domestic banking industry, this marked a turning point, as for the first time since two years banks' issues outstripped redemptions. Outstanding bank bonds stood at EUR 414 billion.
Issues of new securitisations by Special Purpose Vehicles (SPVs) ran to EUR 12 billion, an increase of 120% q‑o‑q). Still, quarterly SPV issues were historically subdued compared to the five-year average of EUR 17 bn.
Of all new issues by Dutch issuers during the second quarter of 2014, 13% (EUR 12 bn) was bought by Dutch investors. The lion's share consisted of SPV paper held by the originators (EUR 9 billion). Insurers, too, bought over EUR 1 bn's worth of newly issued Dutch bonds, mainly securitisations.
Decline in money market issues
In the second quarter of 2014, gross issues of money market paper came to EUR 74 billion, EUR 16 billion less than in the preceding quarter (-21% q‑o‑q; see Figure 2), reflecting traditionally high issues during the first quarter. Over the part three quarters, short-term debt issues lagged far behind those recorded for the past five years. Recent gross quarterly issues came out at EUR 75 bn, EUR 93 bn and EUR 74 bn, respectively, compared to a five-year average of EUR 110 billion.
Money market activity in the Netherlands is dominated by the banks and general government. Banks borrowed EUR 24 billion (-13% q‑o‑q) while redemptions ran to EUR 27 billion. The central government issued EUR 25 billion's worth (+35% q‑o‑q) and redeemed EUR 22 billion. Total outstanding money market paper came out at EUR 136 billion (+2% q‑o‑q).
In parallel to developments in the Netherlands, euro area money market issues declined (EUR 1,305 bn; -13% q‑o‑q) while the total amount of outstanding money market paper declined by EUR 63billion or -5% q‑o‑q to EUR 1,329 billion.
Figure 2: Quarterly issues of Dutch money market paper (in EUR bn)