Divided Belgium seeks 3.0 billion euros in bond sale

18th January 2011, Comments 0 comments

Belgium sought Tuesday to raise more than 3.0 billion euros ($4.0 billion) in a 10-year bond sale via a banking syndicate amid growing market pressure over the country's marathon political crisis.

Belgian Finance Minister Didier Reynders said the sale was going "very well" and that he expected the figure to be "largely exceeded."

"We hope to raise a significant part of our needs for 2011 by benefiting from a reduction in the pressure on the rates," he said.

Jean Deboutte, strategy and risk management director at the Belgian Debt Agency, told AFP the goal was to raise at least 3.0 billion euros "but we hope to raise 4.0 billion or even more."

Going through a banking syndicate allows the eurozone state, whose national debt is set to be almost equivalent to a full year's entire economic output in 2011, to avoid going direct to international borrowing markets.

The rates Belgium has to pay to borrow money have risen recently, as markets and Belgian financial officials express worries about the failure by Flemish and French-speaking parties to form a government seven months after elections.

The yield on Belgian 10-year bonds rose to 4.220 percent at 1200 GMT on the secondary market from 4.120 percent on Monday evening.

Tuesday's bond issue replaces a traditional auction originally planned for January 31, although Deboutte said there was "nothing exceptional" about the move which he said takes place "almost always in the new year."

Spain successfully raised at least 5.0 billion euros last week in a similar syndicated issue, according to one of the banks involved there.

"For a slightly smaller country like us, this is the only way to get a large volume of 4.0 or 5.0 billion euros," Deboutte said.

Maturity for the Belgian bonds is fixed at September 28, 2021, with BNP Paribas Fortis, Royal Bank of Scotland, Societe Generale Corporate and Investment Banking and UBS Investment Bank mandated to lead the issue.

The result of the sale was expected to be released later Tuesday.

© 2011 AFP

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