Austria announced that it will launch a new bond program for retail investors from Monday, which, like other European governments, will get them in line to tap into growing demand from retail savers. The duration of the Austrian bonds intended for the public will vary:
government bonds with a maturity of one month, 12 months and 10 years will also be offered, and the minimum investment amount starts from 100 euros.
As part of the innovation Austria also offers green bonds to retail investors. These revenues are used to finance environmentally friendly projects, including the development of a sustainable energy system.
The term of the green bonds can be six months or four years, making Austria the first country to offer this type of securities to private investors in euros.
In Europe, residential demand for government bonds has increased significantly in the recent period. This is because savers sought higher yields compared to bank deposits, which could not keep up with market yields rising as a result of the European Central Bank’s interest rate hikes.
Austrian government bonds will continue to be available for purchase directly from the Austrian Treasury. The bonds will have a fixed interest rate, the rate of which is updated daily.
Currently, the interest rate ranges from 3.50% for a one-month bond to 2.50% for a 10-year bond.
Just for comparison, The interest rate on the Euro Hungarian State Paper available to the Hungarian population is currently 3.94% per annum (this changes every 3 months depending on EURIBOR). We wrote more about EMÁP here:
Source: Reuters
Cover image source: Getty Images
Tags: Austrians introducing residential government securities
