Expectations are rising that special high-yield government bonds will go on sale by the end of this year, in a sequel to the enormously successful sale of debt by the Belgian State last summer.
On Tuesday, Sudinfo reported that it had "already learned that there will be a new bond in December, or even maybe more than one, at the beginning of December". It added that the bond's issuance will be confirmed on Friday 10 November or "at the latest" by Monday 13 November.
On the same day, Le Soir reported that a new one-year state bond will be available for purchase as early as 23 November. It also quoted Jean Deboutte, the Director of the Belgian Debt Agency, who confirmed that "the details will be communicated on 10 November".
Belgian Debt Agency Director Jean Deboutte. Credit: Belga / Hatim Kaghat
Approximately 600,000 Belgian citizens participated in the government's previous bond sale, which raised a colossal €21.9 billion for the Belgian State.
By design, the bonds are an attractive alternative to the savings rates offered by most Belgian banks. Indeed, Finance Minister Vincent Van Peteghem noted that the main purpose of the bonds was to "boost competition and encourage banks to raise interest rates".
Some Belgian media outlets, including Le Soir and Virgule, anticipate that the new bonds' rates will be even more generous. Both predicted that they will offer an effective yield of 2.91% – ten basis points (i.e. 0.1 percentage point) more than those issued in August.
'All scenarios are possible'
Experts interviewed by Belgian media didn't rule out the prospect of a new bond sale. "We have to study with the Debt Agency the evolution of the banks' savings rates," Miet Deckers, a spokesperson for Finance Minister Vincent Van Peteghem, told Sudinfo. "We have to do an analysis and see what that leads to."
Similarly, Deboutte informed Le Soir that "at this stage, all scenarios are possible", adding: "An issue is planned but the maturity of the products has not yet been decided."
'It's a gamble'
However, some analysts expressed concern about the potential dangers of another bond sale.
Eric Dor, the Director of Economic Studies at the IESEG School of Management, said that another issuance could exacerbate Belgium's already soaring levels of government debt, which has become increasingly difficult to service owing to repeated interest rate hikes over the past year by the European Central Bank.
"From the point of view of the collective interest, it is a gamble," Dor told Le Soir. "It would not be good to have too much debt in the short term, especially if rates go up. If they go down, it's good for debt financing anyway."
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"However, there is great uncertainty at this level: some believe that the European Central Bank's bullish cycle is over, but the International Monetary Fund, for example, expects inflation to rise."
Echoing previous remarks, Dor conceded that Belgium's largest banks still had room to increase customers' savings rates. "We know that the big banks can afford to make an effort on savings [rates]; less so the small ones... The advantage of [issuing bonds] is that it does not force anyone's hand. It is a good way for politicians to try to score points."
