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Dutch schemes need €255bn of long bonds – IMF

NETHERLANDS – Dutch pension funds are estimated to require more than €250bn of long-term bonds to help them match liabilities, the International Monetary Fund says.

The figure is larger than the Dutch State Treasury Agency’s debt position. According to the DSTA, the Netherlands’ debt position stood at €225.7bn at the end of August.

The IMF – in its latest Global Financial Stability Report – said major institutional investors increasing their holdings of longer-term fixed-income securities is “likely to remain a feature of financial markets for many years”.

“For instance, pension funds in the Netherlands are estimated to require some €255bn of long-term bonds to lengthen the duration of their assets in line with liabilities,” the report stated.

It added that more work is needed to ascertain the influence of institutional investors on long-term bond yields.

In April the DSTA issued a new 30-year bond which it said met with an “overwhelming response”.

Finance minister Gerrit Zalm said the new issue was a “win-win situation for both investor and taxpayer”. Pension funds and insurers each accounted for over 10%. Next to the Netherlands, the UK and France were also well represented.

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