New Belgian government bond becomes the most popular ever without a tax benefit

Belgium’s latest government bond raised more than €1.2 billion without the tax incentive that helped drive earlier record issues. The total ranks as the second-highest ever, according to the Debt Agency.

The one-year bond attracted more than €1.1 billion, far more than the €112 million committed to the 10-year version. The shorter bond offers a net interest rate of 1.93%.

Only the 2023 Van Peteghem bond and the 2011 Leterme bond raised more. Those issues collected nearly €22 billion and nearly €6 billion respectively, but both reduced withholding tax on interest. The latest bond had to attract investors without that advantage, and did so despite what the report describes as a relatively modest return.

When people buy a government bond, money moves from banks to the federal government. Banks have not generally made their standard savings accounts much more attractive. Keytrade offers one account with a 2% rate and no special conditions, while traditional savings accounts, where most Belgians keep their savings, pay an average of 0.6%.

Some banks have raised rates on accounts with special conditions, such as limits on monthly deposits. Smaller banks have also increased rates on term deposits, with some now offering slightly more than the government bond, probably temporarily.