Content area
Full Text
The Netherlands has once again proven the effectiveness of its Dutch Direct Auction system. Its new 10 year benchmark garnered bids of around Eu12bn, enabling the Dutch State Treasury Agency (DSTA) to allocate Eu5.1bn of bonds at a spread of 2bp over the July 2016 Bund, the tightest spread the country has ever achieved against Germany.
The new rules include the reclassification of ALM accounts out of the real money bracket while the non-competitive bidding option, which gave primary dealers the opportunity to bid for 15% of the issue, has been abolished.
As a result, end investors were allocated a higher percentage of bonds -- 51% of the issue -- and other banks were able to participate on a level playing field.
"One of the goals we had for this auction was to focus on real money investors," said Niek Nahuis, head of money and capital markets at the DSTA. "And we think we have achieved a good result, especially bearing in mind that we have changed the definition of real money to exclude ALM accounts, which...