Dutch investors continue to invest in European countries heavily impacted by COVID-19 despite loss in value

Debt securities purchases from heavily impacted European countries in March 2020

In March 2020, Dutch investors on balance purchased debt securities worth EUR 3.3 billion from issuers resident in France, Italy and Spain (see Chart 1). This appears from preliminary DNB figures based on reports covering approximately 80% of Dutch securities holdings.

Relative to the positions as at the beginning of March 2020, the purchases amount to 1.8% of private and institutional investor debt securities portfolios and are almost evenly divided over government bonds (EUR 1.7 billion) and corporate bonds (EUR 1.6 billion). Net purchases focused on France (EUR 3.9 billion) and Italy (EUR 0.3 billion), while net sales were concentrated in Spain (EUR 0.9 billion).

Dutch investors also purchased debt securities on balance from other countries. There were no significant cross-border movements in the positions of money market and capital market paper, except for large net domestic purchases (EUR 9 billion). Corporate and government debt securities issued in the most severely impacted countries was not treated differently from debt securities issued in other countries. In January and February 2020, Dutch investors sold debt securities issued by heavily impacted European countries on balance (EUR 1.0 billion and EUR 0.1 billion, respectively) compared to net purchases from other countries.

Losses on debt securities

Net debt securities purchases are relatively small compared to the heavy losses caused by the pandemic. The market value decline of the debt securities portfolio for France, Italy and Spain together amounted to EUR 7.4 billion in March 2020, representing negative return of 4.1%.

The fact that Dutch investors are buying debt securities now that bond prices are falling is understandable: institutional investors in particular tend to react in a countercyclical manner by holding. Also, by mid-March 2020 the markets recovered in response to policy measures across the world, thereby relieving pressure on fire sales prompted by the crisis in the final weeks of March.

By the end of the first quarter, Dutch investors had debt securities holdings worth EUR 180 billion from France (EUR 130 billion), Italy (EUR 21 billion) and Spain (EUR 29 billion).

Purchases – and value losses – for listed equities from heavily impacted countries

Further information

More information on selected countries is available on our website. The figures presented are preliminary figures based on a sample:

• debt securities holdings by country of issuer (preliminary figures)
• Listed holdings by country of issue (preliminary figures)