NETHERLANDS – The market for Dutch corporate bonds has doubled to €105bn since 2007 due to falling interest rates on both bonds and bank loans, according to supervisor De Nederlandsche Bank (DNB).

The DNB concluded that the capital markets had become a structural source of financing for the limited number of companies that issue credit.

The market grew in 2009 and 2012 in particular, when large companies issued €31bn and €16bn, respectively, it said.

The watchdog added that the issuance of credit during the first six months of 2013 amounted to €4.5bn.

The DNB attributed the growth of the credit market in part to the fact interest rates on bonds dropped below the interest level on bank loans.

"In addition, banks' conditions for loans have become more stringent," it said.

The regulator noted that the share of credit in external capital in companies had increased from 15% to 20% since 2009.

Interest rates on capital markets in the Netherlands dropped from 4.2% for five-year government bonds in 2006 to 0.5% at the end of 2012.

"As a consequence," the watchdog said, "investors have actively pursued higher returns through long-term credit."

It argued that the increased demand has led to a drop in interest rates, with rates for five-year corporate bonds falling from 6.2% in 2008 to 2.1% last December.

The DNB said it expected more credit to be issued this year, as companies will have to pay off €7.2bn over the second half.

According to the regulator, the number of companies issuing credit is "limited", with just eight major players active during the first six months of the year.

The largest players include telecoms firm Koninklijke KPN, energy giant Royal Dutch Shell and beer brewer Heineken, having issued €13.2bn, €10bn and €8.2bn, respectively, the DNB said.