EXCLUSIVE: Dutch Debt Issuance Head: Don’t Want to Cancel Auctions or Bill Programmes Again
9 June 2021
By David Barwick – Frankfurt (Econostream) – The Dutch State Treasury Agency hasn’t ramped up its bill programme out of caution in the context of last year’s pandemic-related need to cancel auctions and bill programmes, according to Elvira Eurlings, head of the DSTA.
In an interview with Econostream on Friday, Eurlings said that whilst the DSTA was keen to meet the commitment it had made to the 30-year as the longest point on its curve, it would consider the possibility of extending the curve when consulting with investors during the process of drafting next year’s funding plan.
Eurlings confirmed that the DSTA was not planning any further DDAs in 2021.
The DSTA will issue its quarterly update in a week, and although funding needs this year are subject to ‘the same level of uncertainty’ as last year, she said, ‘there have been some lessons learned’ about how to deal with this.
‘The bill programme is not so much ramped up, as we are cautious and want to take a bit more time to see where the numbers really end up and avoid the developments of the second half of last year, when the funding need turned out to be significantly lower’, she said. ‘We don’t want to have to cancel auctions and bill programmes again.’
‘So we are a bit more cautious in already getting the funding in, and we want to be a bit closer to the quarterly updates’, she said. The DSTA can be very flexible if need be, and in addition to its bill programme can also recur to commercial paper, she said.
Asked about the possibility of going beyond the DSTA’s current maximum of 30 years, Eurlings noted that a longer-dated maturity would dovetail with the objective of a longer average maturity of the portfolio.
‘But we haven’t issued a 50-year up to now because only in 2020 we issued a 30-year, which is really the longest point on our yield curve, and we had a commitment to bring that level up to a certain amount outstanding, and we are in the midst of doing that’, she explained. ‘So we want to make sure that we first meet that commitment that we made before.’
However, the subject is ‘a valid question for us to touch base with the market again’, she said, and will thus come up during consultations with investors to take place when the 2022 funding plan is drafted. Depending on the feedback from these, going beyond 30 years was ‘potentially’ something for next year, she said.
Eurlings reported no signs of any shift in demand away from longer-dated tenors, noting that the DSTA had issued or tapped various bonds with maturities of between 15 and 30 years. ‘So I think we have some evidence about what the appetite is on the longer end, and we have not seen any decrease in appetite for longer-dated maturities so far’, she said.
‘You need to make sure that you have good coordination amongst one another and you should determine the right timing, but I think from the investors’ point of view, we do still see significant demand’, she added. ‘So if I would see that the auctions in the longer end become harder or cumbersome, then we might need to reconsider. But that’s not something that I see is happening right now.’
Eurlings confirmed that she expected no more DDAs this year, with the 8-year DSL to be issued via a tap auction using the MTS system, with which the DSTA had had a positive experience when social distancing requirements last year made a DDA less practical.
‘The 10-years are really our benchmark bonds and those you want to do with a full-fledged auction’, she said. ‘But since the launch of the 7-year DSL went very well through this MTS process, we will repeat that with the launch of the 8-year DSL. So, no further DDAs this year.’
In other comments, Eurlings said the DSTA hoped to increase the Asian share of its investor base.
‘I think it’s good to always try for a geographically diverse investor base, and we did see before 2020 that the Asian representation had become somewhat less’, she said. The pandemic had unfortunately interfered with the usual outreach via roadshow, she said.
‘We hope to be able to return when travel requirements allow it, to always make sure that our story gets told to a diverse range of investors’, she added.