The Belgian government still issues government bonds: how attractive are they? And what are the alternatives? | My guide

In June, government bonds brought the government nearly 40 million euros. The September issue was good for 20.6 million euros. In five, eight and ten years, September government bonds produce gross yields of 1.05%, 1.40% and 1.70%. The next issue is scheduled for December 4th.

Government bonds or bonds, issued by the Belgian government, have private investors as their main target group. In principle, the government issues a state coupon four times a year. However, this was not the case during the crown crisis. Last June was the first time in three years that new government bonds were available. It happened a second time in September. Another issue is scheduled for December 4, 2022. This bond contains an annual coupon, interest. The duration of a government bond varies from three to ten years.

Reading advice: Belgian ten-year interest rate above 3 percent for the first time since 2012: what are the consequences for those who save, borrow or invest?

With a government bond your capital is guaranteed. This is important in times of crisis. People don’t want to take the risk of losing money by investing in stocks or funds, for example. But because the coupon yields between 1.05 and 1.70% gross – or net of the 30% withholding tax, between 0.735 and 1.19% net – some seek savings products with a better interest rate.

The OLOs (Obligation Lineaire / Lineaire Obligatie) are also attracting considerable interest. This year the government raised over € 41.2 billion thanks to OLOs. The Belgian Treasury issues the linear loan with maturities between two and thirty years. The difference between a government bond and an OLO? While government bonds are primarily intended for individuals, OLOs are primarily intended for institutional investors, such as banks and insurers.

But private individuals can also tap them on the head. After being listed on the stock exchange, most Belgian banks and brokers offer them to private individuals. The interest rate for OLOs is generally higher than that for government bonds. In mid-October, interest on ten-year OLOs rose to around 3% gross, or around 2.10% net.

also look: The evolution of OLO interest rates over ten years.

Another alternative that makes more of a government bond is the forward account. For example, the comparator Spaargids.be indicates that you can turn to Deutsche Bank for a ten-year term account with a gross interest rate of 2.34%. The net interest is 1.638%.

also look: Compare the performance of different term accounts here.

Savings notes with a ten-year maturity can also yield more than younger government notes with the same maturity. Comparator Spaargids.be reports that Deutsche Bank issues such savings certificates with a gross interest rate of 1.89%. After deduction of the 30% withholding tax, a net yield of 1.323% remains.

also look: Compare the performance of different savings certificates here.

Read also on Spaargids.be:

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