Government bonds have been whipsawed by turmoil in the banking sector following the collapse of U.S. lender Silicon Valley Bank and a rout in Credit Suisse shares. "The higher volatility does not impact our issuance plans or our normal way of working," Maric Post, director of treasury and capital markets at Belgium's debt agency, said.
Post said the agency continues to take recommendations from its primary dealer banks, which participate in auctions and trade its debt in the secondary market, on the choice of bonds it issues and how much it sells.
Discussing an auction coming up on March 20 with its dealers which was announced on Tuesday, Post said the agency didn't get the feeling that volatility would impact the format it chooses for its debt sales.
Asked whether he was worried about dysfunction in the bond markets, Post said: "the feedback that we get from our dealers is quite sanguine."
"Yes, sentiment and price swings are extreme, but (euro zone government bonds) markets in general and our (Belgian) OLO market are certainly functioning," he added.
Post said the moves in bid-ask spreads, the gap between
buyer and seller prices, which have widened and made it harder
for investors to trade bonds, was normal in the context of the
volatility this week.
"In 2022 we have seen how such moves retract once the
volatility lessens," he said.
(Reporting by Yoruk Bahceli; Editing by Dhara Ranasinghe)
