Belgium Issues New 1-Year Government Bond Yielding Net 1.93 Percent

Belgium is set to release a new 1-year government bond, offering investors a net yield of 1.93 percent after withholding tax. This follows the announcement by the Federal Agency of the Treasury. For those looking for a longer-term investment, a 10-year government bond will be available with a net yield of 2.59 percent.

Subscriptions for these bonds will open on Wednesday and will remain open until September 1. The gross interest rate for the 1-year bond stands at 2.75 percent, while the 10-year bond offers a gross rate of 3.70 percent. After the mandatory 30 percent withholding tax is deducted, the net yields are 1.93 percent and 2.59 percent, respectively.

The net yield on the 1-year bond represents a slight increase compared to the previous issuance in June, which offered 1.75 percent. Notably, a highly popular government bond issued in 2023 had a net yield of 2.81 percent, a result of a one-time reduction in withholding tax by then-Finance Minister Vincent Van Peteghem.

A government bond, or 'staatsbon,' is essentially a loan extended by citizens to the Belgian state for a predetermined period. Investors receive annual interest payments, and the principal amount is repaid upon maturity. Individuals can subscribe to these bonds through the Federal Agency of the Treasury or via a bank.