Dutch private investors hold an increasingly smaller proportion of the Netherlands’ sovereign debt. In the third quarter of 2019, they held EUR 90.8 billion (nominal), against EUR 93.2 billion in the second quarter, down 2.5% quarter-on-quarter. Their investment positions in Dutch sovereign debt have shown a downward trend over the past five years.
Holdings of Dutch government paper further down
Dutch private investors hold a significant proportion of the Dutch sovereign debt, and the largest among them are banks, investment funds, insurance firms and pension funds. Their positions have shown a downward trend over the past five years, due in part to the European Central Bank's asset purchase programme. Set against EUR 122 billion at year-end 2014, before the programme's launch, these investors allocated 25.5% less in the third quarter of 2019, at EUR 90.8 billion (nominal). In the same period, the outstanding Dutch sovereign debt fell from EUR 347 billion to EUR 303 billion, representing a 12.7% decline. As a result, the proportion of outstanding Dutch government paper held by major private investors dropped to 30% in the third quarter of 2019, against 35% at year-end 2014 (see Chart 1). DNB's share rose from 1% to 25% over the same period.
Banks wind down their positions in Dutch sovereign debt
The decline in Dutch private investment holdings in Dutch government paper can be attributed to the fact that Dutch banks are reducing their positions. Whereas at year-end 2014 they held 12.1% of Dutch sovereign debt, at EUR 42 billion, their combined positions in the third quarter of 2019 stood at 6.0%, or EUR 19 billion. Over the third quarter of 2019 they reduced their positions by 7.2% quarter-on-quarter, or EUR 1.4 billion. In July 2018, the Dutch Treasury redeemed large volumes, which banks did not reinvest in Dutch government paper. The combined proportion held by investment funds, insurance firms and pension funds remained flat over the period from the fourth quarter of 2014 and the third quarter of 2019, at around 23%. Their combined investment position in Dutch sovereign debt fell from EUR 79.9 billion at year-end 2014 to EUR 72.6 billion in the third quarter of 2019.
Long-term government bonds show the sharpest decline
Dutch investors tend to prefer long-term government paper. At year-end 2014, Dutch private investors held EUR 39.1 billion in government paper with residual maturities of more than 10 years. By the end of the third quarter of 2019 this had dropped by EUR 9.6 billion to EUR 29.5 billion. As a percentage of total outstanding sovereign debt, holdings of long-term paper shrank from 75% at year-end 2014 to 48% in the third quarter of 2019. In the third quarter of 2019, too, these positions decreased, by over EUR 1.2 billion, or 3.9% quarter-on-quarter. The proportion of government paper with residual maturities between 5 and 10 years also fell between year-end 2014 and the third quarter of 2019, from 42% to 22%. In value terms, these positions decreased from EUR 22.3 billion to EUR 18.2 billion in the third quarter of 2019. This is the maturity segment in which Dutch banks have made the biggest reductions since year-end 2014, cutting their holdings by EUR 17.6 billion.
DNB publishes quarterly data on holdings of Dutch government paper. The tables analyse these data by investor category. Data are based on samples taken from direct statistical reports and are not grossed up.