Belgium Starts European Debt-Sale Rush With Record Orders
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Loading... - Anastasia Gabris
- 08 Jan 2025
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Belgium has kicked off a significant wave of debt sales in Europe, successfully selling €7 billion ($7.5 billion) in 10-year bonds that attracted an unprecedented level of demand. The country's debt agency reported receiving over €88 billion in orders for the securities, reflecting a strong investor appetite for higher yields as the European Central Bank (ECB) is expected to further reduce interest rates.
The bond offering was priced with a spread of 66 basis points over swaps, which was lower than the initial guidance provided to investors. This strong response bodes well for upcoming debt sales from other European nations, as market conditions appear favorable for borrowing.
Strategists at Commerzbank AG anticipate that countries such as Ireland, Portugal, and Italy will follow suit with their own debt offerings in the near future. Additionally, larger economies like France, Spain, Austria, Finland, and Germany are expected to enter the market in the coming weeks. Slovenia is also set to issue a new 30-year security on Tuesday.
Market participants are increasingly betting that the ECB will continue its trend of interest rate cuts, following a one-percentage-point reduction last year, with expectations that rates could drop to 2% by the end of the year as inflation and economic growth in the region slow.
While debt syndications are generally more costly than traditional auctions, they provide governments with the ability to raise substantial amounts of capital quickly and broaden their investor base. Following the bond sale, Belgium's 10-year borrowing costs rose slightly, reaching 3.06%, the highest closing level since July.
The bookrunners for Belgium's successful bond deal included major financial institutions such as BNP Paribas SA, Credit Agricole CIB, HSBC Holdings Plc, JPMorgan Chase & Co, and Morgan Stanley. This strong demand for Belgian debt signals confidence among investors and sets a positive tone for the upcoming wave of European bond sales.
