Smaller borrowers in the fractured and crowded European sovereign bond market sometimes complain that life would be easier if they had more money to raise in a market which equates size with liquidity and rewards it with a premium. “In the end we have a limited amount of debt to fund,” says Erik Wilders, agent of the ministry of finance which manages public debt through the Dutch State Treasury Agency, “but we have to make choices on which bonds to issue in adequate size.”
The DSTA has issued interest and principal only strips to enable investors to reconstitute holdings of seasoned bonds into newer, more liquid lines.
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