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Thursday, 18 July 2019

Belgium issues first ever Century bond

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The Kingdom of Belgium on Wednesday priced its first ever 100-year bond, a €50m 2.50% September 2115 note, taking advantage of the low-yield environment.

The deal is publicly listed, but issued off the sovereign’s EMTN programme as opposed to the Obligations Lineaires Ordinaires (OLO) programme through which it does a majority of its funding.

While the transaction size is small, the absolute yield on offer was attractive and provided an opportunity to establish a bond at that tenor that can be reopened at a later stage, said a Belgian treasury official.

“The funding cost is only a little bit above the ECB target for inflation, and though it won’t make a big difference to our funding in terms of size, we are of course ready to increase the size if possible,” said Jean Deboutte, director – strategy, risk management and investor relations at the Belgian Debt Agency.

“It is also an indication that there are investors that have confidence in Belgium in the long term,” he said.

The transaction was sole-led by Goldman Sachs. One observer said it was rumoured to have been sold to a single German account, though the official declined to comment.

The trade comes at a time when Belgium is looking to take advantage of low yields and extend the maturity of its curve.

Earlier this year, the debt agency’s head, Anne Leclercq, told IFR that the sovereign was considering the issuance of an ultra-long-dated bond with a maturity of up to 50 years.

That plan is still on the boil, said Deboutte, though the issuer is also taking other options into consideration.

“We have one syndication left for the year and our preference would be to do the 50-year, and that is still on the table. But if we cannot do it, we would also look at other options, such as a six-year or maybe a floating-rate note,” he said.

 

 

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