2023-09-11 17:16:28
Could Wallonia offer a product comparable to the Federal State bonds which made it possible to raise 22 billion euros? Yes but no, essentially replied the Walloon Budget Minister, Adrien Dolimont, questioned on the subject by Stéphane Hazée (Ecolo), Monday, in committee of the regional parliament.
According to the Walloon Region Debt Unit, despite the limited amounts that might be raised and the foreseeable difficulties, offering this type of term product might be a source of diversification of the Region’s means of financing.
“The rate that Wallonia might offer savers for such an operation depends on the maturity targeted by the hypothetical Walloon bond, as well as by the underlying commissions requested by the placement agents,” explained the minister.
According to the Debt Unit, “if Wallonia were to issue a bond with a maturity of 3 years following the Federal approach, the net yield of the issue would be less attractive than the 12-month state bond. And at the moment, given the attractiveness of the recent government bond, if the Region wanted to issue at a competitive rate attractive to savers, it would certainly be led to increase the rate differential compared to benchmark federal bonds, which would constitute a signal for institutional borrowers “who would increase their rates to lend to the Region”, detailed Adrien Dolimont.
According to the latter, the profile of the direct regional debt schedule also does not allow the Region to issue significant amounts in the short term. Wallonia has also already completed its financing plan for the year 2023, having notably carried out a social issue in two tranches for a total of 1.5 billion euros, as well as a 100% green issue for an amount of 700 million euros.
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“The Federal Debt Agency carries out one or more operations of this type per year, with relatively unpredictable results, the success of the last operation being more the exception than the rule,” continued the minister.
Finally, “the establishment of a hypothetical regional voucher would also bring additional constraints which the Federal government does not have to face”, such as the absence of a regional distribution network, he concluded.
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