The Netherlands will borrow about 4 percent less next year than in 2013 as the fifth-biggest euro-area economy implements austerity plans and returns to growth.
“The total funding need in 2014 is foreseen to be about 4 billion euros ($5.5 billion) lower than in 2013,” the Dutch State Treasury Agency, known as the DSTA and based in The Hague, said today in a statement. The debt office estimated its 2014 external funding will be 93.7 billion euros, unchanged from a September forecast.
The Dutch government reached an agreement in October with opposition parties for a 6 billion-euro austerity package for 2014, including spending cuts and tax increases. That’s on top of a four-year, 16 billion-euro package approved late last year. The Netherlands resumed growth in the third quarter, having suffered three economic slumps since the global financial crisis started in 2008.
The yield on the Dutch 10-year bond was little changed at 2.14 percent at 5:02 p.m. in Amsterdam. It’s increased 64 basis points since Dec. 31. The extra yield investors demand to hold the securities instead of benchmark German bunds was little changed today at 31 basis points.
The Netherlands plans to sell new three-, five-, 10- and 30-year bonds next year, the country’s debt office said. The 10-and 30-year securities will be sold between February and April. A U.S. dollar-denominated bond sale remains a possibility, the debt agency said.
Total sales of bonds and notes will be about 50 billion euros in 2014, similar to this year’s amount, according to today’s statement. The DSTA said on Sept. 20 it had raised its estimate for this year’s external funding needs to 97.6 billion euros from 95.9 billion euros in June, with the extra requirement to be met via money markets. Any budgetary “setbacks or windfalls” will be treated the same way this year, the debt agency said.
Dutch government bonds lost 1.7 percent this year through yesterday, according to Bloomberg World Bond Indexes, the worst performer of 15 euro-area debt markets after Germany’s, which dropped 1.8 percent.
Sales of government bonds are falling across Europe as nations implement measures to control their budgets in the wake of the region’s sovereign-debt crisis. Belgium said on Dec. 10 it planned to sell 30 billion euros of bonds next year, the least since 2007.
The Netherlands’ will grow by 0.5 percent in 2014 as the world economy improves and consumer confidence picks up, the country’s central bank forecast Dec. 9.
Standard & Poor’s stripped the nation of its AAA grade for the first time last month, citing a weaker economy. The nation’s credit rating was lowered to AA+, while the outlook was raised to stable from negative.
Investors often ignore ratings, as evidenced by the rally in Treasuries after the U.S. lost its top grade at S&P in 2011. The Netherlands retains the top rank at Moody’s Investors Service and Fitch Ratings.
“The downgrade of the Netherlands doesn’t have any consequences,” for funding, Niek Nahuis, director of the DSTA, said in an interview in The Hague today. “The Dutch interest rate hardly moved when the downgrade was announced,” he said.