Belgian federal debt agency issues two new bonds

Belgium will issue a new one-year and a three-year government bond on 4 March, the country’s debt agency has announced.

This will be the first re-issue of a one-year bond since September 2023, which attracted an exceptionally reduced withholding tax rate of 15%.

But, unlike last year, the withholding tax rate on this latest bond issue will remain at 30%.

“The agency aims to limit the amount raised through these two bonds to €6 billion in any case. It may close the subscription for these state bonds in advance if necessary,” the debt agency said.

Subscriptions through an investment institution such as a bank, for a fee, can be made from 22 February to 1 March 2024.

Subscriptions made via the debt agency’s ‘Grands Livres’ service can also be carried out, free of charge, from 22 February until 29 February or until the €6 billion is raised.

The federal debt agency issued one-year state bonds between 22 August 2023 and 1 September 2023. This move turned out to be the biggest financial success in Belgian history, with some 600,000 people investing nearly €22 billion in the scheme.

Belgian finance minister Vincent Van Peteghem said it would be irresponsible not to issue the new state bond.

“Experts from the National Bank, the debt agency and the finance ispectorate as well as all economists say [the bond] would be a good thing for the budget and savers,” he told VTM Nieuws.

Banks have also opposed the one-year bond. After all, record amounts were withdrawn from savings accounts as a result of the last issue in 2023.

But Van Peteghem said the operation would not disadvantage these institutions because of the €6 billion cap on what can be raised.

The bond has a headline gross interest rate of 3% - but once the 30% withholding tax is applied, the effective net interest rate will be 2.1%.