Belgium borrows short-term at record negative interest rates
Wednesday, 12 August 2015
Belgium has borrowed a total of 1.29 billion euros short-term, through 3 month and 12 month Treasury certificates. These loans will involve record negative interest rates, the Federal Debt Agency said on Tuesday. The three month Treasury certificates stipulate a loan of 504 million euros. But it’s the negative interest rate applied that is really shocking: -0.24%, a record. “For a while now, we have done a bit better with each tender. Treasury certificates are very successful, even compared to other short term European shares”, says Jean Deboutte, the Debt Agency director.
He says this new record can be explained by the European Central Bank’s (BCE) accommodating monetary policy, as well as the small amount borrowed, in this case less than a billion euros. It could also be due to the regularity of tenders for Treasury certificates, which provide liquidity “that investors seem to like”.
Belgium also borrowed 1.42 billion euros, at an average rate of -0.199%, through 12 month Treasury certificates. These negative interest rates, which are becoming normal but are nevertheless unusual, means Belgium will pay back slightly less than it borrowed.