BRUSSELS (MNI) – The Netherlands aims to sell around E50 billion in
euro-denominated bonds in 2011 compared to E52 billion this year, the
head of the Dutch State Treasury told Market News International.

The agency is also looking at a dollar-denominated issue next year,
Erik Wilders said. “We have almost finalized our internal procedures and
the documentation is ready. We are now just waiting for a window to
sell.”

The new dollar bond “will be in the 3-/5-year sector,” Wilders
said. “We are aiming for at least a benchmark size, depending on
investor demand and market circumstances.”

The dollar sale will be via DSTA’s traditional issuance technique,
which is Dutch Direct Auction (DDA), he said. “We aim to be more
flexible in dollar issuance than we are with our domestic bond
issuance.”

“Our core programme remains euro issuance, and we always aim to be
predictable and transparent in the market by announcing the amounts we
aim to do at the beginning of the year, along with the auction dates,”
stressed Wilders. More details will be available once plans are
finalized on December 10, he added.

“The dollar issue is an extra instrument, which we use if
beneficial and only opportunistic,” he explained. “We don’t aim to
create a liquid dollar curve, and we don’t aim to be there at every
moment.”

The agency has sold around E49 billion worth of bonds so far this
year and is planning to re-open the 10-year 3.50% July 2020 DSL issue on
November 9 for only E2.5-3.5 billion, he said. This implies the DSTA
will sell the E52 billion worth of bonds it stated earlier this year and
that the reserve auction date on December 14 will be cancelled.

The debt agency cancelled its reserve auction date last year and
used it in 2008 only due to “very special circumstances” given the
interventions in the financial markets, he said.

The agency will not pre-fund for next year, as it aims for
“consistency and transparency,” he added.

Wilders said his experience as the debt chief this year was more
exciting than in the past, as the agency was able to issue a new 30-year
bond in difficult market conditions.

The DSTA last issued a 30-year bond in 2005 and then indicated to
the market that the next new 30-year would be in 2010, if needed. Given
the budget surpluses of past years, it would have been very difficult to
issue such long-dated bond, he noted.

“Moreover, the buyers from 2005 were no longer there, as they
didn’t exist anymore, and the debt agency wasn’t sure how big the demand
was from the new buyers, i.e. pension funds, which added to the
excitement,” Wilders said. “We were therefore in a luxury position to
fulfill our committment to the market, and it is always fun to issue a
30-year bond.”

In terms of duration, Wilders explained that its benchmark is a
seven-year constant-maturity bond, i.e. everything, included its money
market, is financed against the seven-year rate — excluding this year’s
deficit.

“We are currently re-evaluating our risk-management strategy, since
we have a new government, and before the end of the year, we will
provide our minister with a choice for the coming four years,” he said.

“Again, we are relatively boring, so I would be surprised if the
advice deviates much,” he revealed.

— London newsroom: 00 44 20 7862 7494; email: nshamim@marketnews.co

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