Banks are becoming the leading buyers of some euro zone governments’ bond sales, taking advantage of surging interest rates as the European Central Bank looks to reduce its presence in the market. | Reuters
Sales of bonds directly to end investors by bank syndicates so far this year show bank treasuries buying a much larger share of some countries’ debt, according to data from debt agencies and Refinitiv’s IFR, as surging interest rates boost the appeal of government bonds.
They were the top buyers in the European Union’s debt sale this month, buying almost 50 percent of a seven-year bond and 35 percent of a 20-year bond. Last September, they bought 26 percent of a five-year bond and 21 percent of a 30-year, far behind fund managers in second place. Bank treasuries took 30 percent of a 30-year Belgian debt sale in February, versus 10 percent a year ago.The data does not give a breakdown of which exact banks are involved, but banks tend to buy the government debt of their home country.
The swap rate is the fixed rate investors pay to hedge against interest rate risk by receiving floating-rate payments.
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