The new 1-year Belgian state bond that you can subscribe to from Thursday has a net yield of 1.92 per cent the federal debt agency has announced.
The 1-year state note has a gross yield of 2.75 per cent, but after product-related taxes are paid, the net yield works out as a 1.92 per cent gain.
The 10-year Belgian bond will have an annual pre-tax yield of 2.80 per cent.
You can subscribe to both investments from Thursday. Banks take subscriptions till Friday 13 September. Via the government website subscription closes on Thursday 12 September.
Yields are down
The Belgian state note is a popular investment for domestic investors given the security it offers. Last year the yield was a lot higher at 2.81 per cent after tax after the Belgian finance minister spurred the banks on to give savers a better yield on savings accounts. Last year’s high yield was the result of an exceptional tax cut and higher market interest rates. These favourable conditions meant the Belgian state raised a record 22 billion euros.
The debt agency expects to raise around €4 billion this time. Previous 1-year state notes, issued in March and June, combined, raised a billion euros.
What is a state note?
The state note is a type of government bond, intended for private investors. Anyone who buys a state note is lending money to the Belgian state. In exchange, the state pays you an agreed interest rate every year. At maturity, you get your money back.
Where will the 22 billion euros flow tomorrow?
The debt agency is counting on raising more than in March and June because tomorrow the money and the accompanying interest from the popular previous one-year state note will flow back to the accounts of more than half a million Belgians. They now have to decide what to do with this money.
Meanwhile, several banks have launched counter-offensives to recover the cash they lost when the state note was launched exactly a year ago. In recent days, several banks announced new term accounts with better returns than the new state note. A lot of traditional savings accounts also yield more today than a year ago.