European Governments to Banks: Raise Deposit Rates to Attract Savvy Savers

Belgium and Austria have led Europe's rush into retail bonds as governments increasingly court household savers. Belgium's recent €5.5 billion bond targeted at mom-and-pop investors attracted over €22 billion in orders. Austria also saw massive demand for its first ever retail bond issuance in June.

These issuances allow governments to lock in fixed interest costs and reduce refinancing risks. For Belgian households, the bonds offer higher yields than bank deposits as the ECB hikes rates. Austrians also jumped at the chance for positive real returns compared to soaring inflation.

Other European countries are taking note of this retail bond craze. Governments from Germany to Italy have issued or announced similar bonds. But some analysts caution that recession risks may dampen future appetite. Will household caution grow if economies continue to slow?  Reference: https://www.bloomberg.com/news/articles/2023-09-03/europe-s-retail-bond-rush-shows-household-savers-growing-clout

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