Dutch National Mortgage Institute to market bonds to foreign institutionals

Jeroen Dijsselbloem, the Dutch Treasurer, has said the National Mortgage Institute (NHI) currently under development will market its government-backed mortgage bonds not only to local institutionals but also foreign investors.

During yesterday’s consultations with the parliamentary select committee for Economic Affairs, Dijsselbloem said the NHI would primarily issue bonds backed by new mortgages, in addition to mortgages approaching their flexible interest rate phase.

The purpose of the NHI is to ease banks’ funding and pass on the benefits of lower costs to consumers, in order to get the stalled local housing market moving again, the minister said.

The market for high-grade Dutch mortgages is estimated at €150bn.

Dijsselbloem made clear that the risk of losses on the state-backed mortgages would firstly lie with the issuer, and would only shift to the government if the issuer went bust.

“In that case, we would need to deal sensibly with the mortgages portfolio and subsequently sell it at the right moment,” he said.

According to the Treasurer, any additional risks would be assessed during the elaboration of the NHI concept and translated into a risk premium.

Dijsselbloem noted that the set-up of the NHI was still subject to approval by the European Commission.

During the same meeting, Henk Kamp, the minister for Economic Affairs, indicated that the also new Netherlands Investment Institution (NII) will initially focus on projects for sustainable energy, offering potential for investments of up to €20bn.

The NII, another government-backed initiative, aims to upscale projects into investment-ready proposals, but without financial backing by the state.

Another focus of the NII will be on the translation of short-term financing of rental property and energy infrastructure into long-term financing, the minister said.

He added that the NII plan, which is expected to be presented before April, would also target regional projects that failed to attract bank financing.

Kamp stressed that the Cabinet did not want to force investments on institutional investors.

“Only they are to decide what is responsible investment,” he said.

However, the minister noted that the European Commission and the European Central Bank have also voiced support for increased investment by institutional investors in the financing of projects.