There is a lot of demand for Belgian government bonds. This is because Belgium has its financial house in reasonably good order. Another is that investors have lost confidence in many other funds. Belgium finances its national debt by issuing government bonds. They do not have to pay very high interest on this. That could change if things go wrong between Flanders and Wallonia. There is a lot of demand for Belgian government bonds. These bonds are offered on the stock exchange by the Belgian government. She does this to finance her national debt. Investors, as it were, lend money to the Belgian government. They receive a certain interest on this. Depending on demand, the government bond also has a certain price. Especially after the credit crisis and the subsequent fall on the stock market, many people started buying Belgian government bonds. It is known as relatively safe. People would only get their money back if Belgium went bankrupt. That chance is not very great. That is why Belgium only has to pay a low interest rate on the bonds, approximately 2.5 percent. For Greece, which does have a large debt, the interest rate is above 4.0 percent.
Foreign participation in Belgian government bonds
Of the companies and individuals that issue bonds, almost sixty percent come from abroad, i.e. outside Belgium. This is relatively low compared to other countries. Moreover, most loans taken out abroad are long-term debts. These are difficult for banks or companies to dispose of. Therefore, the Belgian government does not have to worry for the time being that it can no longer finance its national debt. In the case of many short-term bonds, it would be a different story. The fact that Belgium does not have to worry also leads to stability and thus reduces the risks of Belgium going bankrupt. And as a result, she can also offer a lower interest rate.
Buy Belgian government bonds
The only thing that foreign countries sometimes worry about is the division in Belgium itself. There are regular political tensions between Flanders and Wallonia. It could be that this will ultimately lead to the split of Belgium. In that case, it would be logical for the national debt to be divided between the two countries via a certain formula. Yet there is uncertainty. During the turmoil surrounding the 2009 elections, credit rating agency Standard & Poor’s considered lowering the AA rating. That would have had immediate consequences for the level of interest. It would rise.
The Belgian national debt
Belgium has a national debt of almost 250 billion euros. Almost all of these must be financed with government bonds. By the way, less than 2 percent of that amount is financed by private investors. That is why she publishes them regularly. This is done via certain banks that take care of its distribution. In Belgium it is therefore only possible to purchase government bonds with an account at the Belgian bank. These bonds are therefore under management. This is difficult because the bank could of course go bankrupt. In that case, you will only be reimbursed up to 20,000 euros in bonds. Something you can do to prevent losing a lot of money at once is to take out bonds with several banks, each time up to 20,000 euros. In that case you always know that your loss will be compensated.