Exclusive: Dutch Debt Head: More Flexible Funding for 2025, But Should Stick to €40 Billion Capital Market Issuance

19 December 2024

By Marta Vilar – MADRID (Econostream) – The Netherlands will deliver a more flexible funding program for 2025 but should stick to the currently expected €40 billion capital market issuance, according to Dutch State Treasury Agent Saskia van Dun.

In an interview with Econostream on 12 December (transcript here), van Dun said that ‘we can be more flexible with the money market issuance’, but was willing to commit to the €40 billion issuance planned on the capital market.

‘I can’t say we will never, ever cancel a DDA or tap auction’, she said after being asked if the DSTA could cancel auctions planned for 2025, given high uncertainty. ‘But generally speaking, we would like to stick to the €40 billion as we did last year’.

The figure for the funding need for 2025, estimated to be around €105 billion, faced higher uncertainty than it did last year, which suggested that the Dutch State Treasury Agency had to be more flexible, she said.

‘Because normally we do 50-50. So, 50% is issued in the capital market and 50% is issued in the money market, and now it's a little bit more towards the money market’, she said. ‘So that would mean that we will steer with more flexibility in that sense.’

Investor demand had been increasing in the longer part of the curve, she said.

Asked whether this higher interest in longer tenors would lead the DSTA to go for a maturity much higher than the 15-year minimum for the new benchmark bond expected for 2025, van Dun said that this was ‘still to be determined’.

‘And now we are consulting the market to see whether we stick to a 15-year, 20-year or (around) a 30-year bond. Something in that range’, she said.

The DSTA was not expecting to issue bonds far beyond the 30-years maturity anytime soon, according to van Dun.

For that to change, the DSTA might need to come up with another average maturity target in next year’s risk framework review, she said.

With a current minimum average maturity target of 8 years, van Dun did not rule out a change of target in the review of 2025.

‘Next year, we are going to evaluate our risk framework and that could end in a change of targets’, she said.

However, she said that she was not expecting the new number to deviate much from the current 8-years target.

There were still no plans to focus on retail bond issuance, according to van Dun.

‘[W] e don't have the capacity and the infrastructure in place to do this’, she said. ‘So, if politicians decide to issue a retail bond - but I don't expect that, to be honest - that would have a big impact for the DSTA.'

Syndications were still not on the table for the Netherlands, she stated.

Asked what the reason behind this was, van Dun said that ‘DDAs [Dutch Direct Auctions] help us balance the best outcome for investors as well as taxpayers.’