Savers across the euro zone are dashing for government debt to secure returns on their cash as banks struggle to keep up with surging interest rates.
Leading the way is Italy, which sold a record 18.2 billion euro retail bond this month to increase domestic holdings of its debt.Portugal has shifted half of this year's funding to savers, Belgium expects a ninefold increase in retail bond sales, and Spanish savers are piling into Treasury bills.
For issuers, it's a sign of confidence that new buyers are moving in as the ECB winds down its bond holdings. Having planned 3.5 billion euros for the whole year, Portugal has already sold around 10 billion euros of new savings certificates to retail investors, Amaral said, up from 4.6 billion euros in 2022 when demand started returning and a mere 500 million euros in 2021.
This means around 15% of outstanding Portuguese government debt now sits with retail investors, versus 10% in recent years. But individuals still only hold 1% of its 1.3 trillion euro public debt overall, a spokesperson said. Scope Ratings says Spain should tap these investors to diversify its refinancing risk and contain borrowing costs.
Dedicated retail debt such as that sold by Portugal and Belgium helps non-professional investors avoid losses from market fluctuations, provide tax advantages and are easier to buy., demand comes from banks themselves, said debt agency head Cyril Rousseau.
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