The European debt market will collide in a short period of time with genuine fire tests. Since investors already saturated with public debt (proof of this high interest rate paid by this active one), there is an avalanche of emissions that will push the bond proposal even more, while demand is sluggish. All this, except when the European Central Bank reduces its balance (removal of liquidity and gives way to the circulation of bonds). Countries with the financial situation are compromised, such as Spain, France or Italy, may suffer from this growing offer of assets (Investors can get rid of bonds with great risk To purchase safer bonds that today pay positive and high performance). The situation can be serious: for the mass emissions expected from Germany, to finance their expenses in the field of defense and infrastructure, the reform of pensions in the Netherlands is now added, which will cause the sale of more than 100,000 million euros in bonds.
According to them Financial timesDutch pension funds are going to press even more European state bond markets at the end of this year, while selling about 125,000 million euros in long -term bonds from a significant reform of the pension sector.
Between 2025 to 2028The Dutch pension sector, which has an amount of assets of 1.5 billion euros, will encounter a transition from a system in which the final payments to pensioners are guaranteed with the framework of certain contributions, in which employers are associated only with the amount they provide. This will imply maintaining a much less prolonged sovereign debt to support your long -term promises and release more funds for investing in higher income assets, such as alternating income and credit market.
Demand falls … the proposal rises
Although some managers have already made changes, Dutch funds that control about half a common assets that should be transferred, will not amend until January next year. Therefore, it is expected that managers will prepare their portfolios in advance. The Strategies of the Dutch bank Rabobank foresee the sale of 127,000 million euros in long -term sovereign debt During the transition. Sale is the latest example of reducing the demand for long -term debt between pension funds, which, added to the record levels of sovereign debt, contributed to an increase in the efficiency of bonds around the world.
“Everyone is concerned extremely (a long part of the bond curve), the European market” of the bond market, says Puja Kumra, a strategist of securities, and adds that sales may occur “very quickly at the end of the year … But preventive operations can be punitive if more delays occur.”
Fatal combination of debt
PFZW, the second largest pension fund in the Netherlands, from 259,000 million euros in the field of assets for healthcare and social workers, reported Financial times Which was in the process of migration in the new system on January 1, 2026. ABP, the largest in the country, plans a transition next year. An increase in the profitability of bonds increases pressure on political leaders, Since Europe increases its debt to finance its ambitions in defense and energyA German expenditure plan of 1 billion euros is controlled, “no matter what is necessary.”
Paolo Angelini, Deputy General Director for Financial Supervision and Regulation of the Italian Bank, made the following reflection a few weeks ago: “The key question: what interest rates will be ready to support the growing amounts of public debt? In other words, what is the reactivity of the demand for sovereign debt to interest rates? ” No one has this answer, but everything indicates that countries such as Italy itself (public debt 137% on GDP) or Spain (with a stagnant debt of 100% GDP and high structural deficiency) will be some of the countries that will first begin to suffer from the trouble of types on the market.
The long -term debt of the eurozone was especially affected. The profitability of German debt for 30 yearsS crossed from less than zero during the Covid-19 pandemic to more than 3%, near its highest levels from the long-term crisis of the Eurozone. An additional interest rate paid by 30 -year French debts, compared with its equivalent of two years, increased by more than 2 percentage points two years ago.
Dutch pension funds, of course, the largest in the eurozone, They used interest rates And government bonds with various temporary horizons, even 50 years or more, in order to adapt to the period in which they must pay their youngest customers. But as the funds move to the system in which they pay in accordance with profitability, they are prone to more risky assets, such as variable income and loan, which expect profitability for their customers in the long term.
“There will be a departure from bonds of 50, 40 and 30 years,” says Mihiel Tekker, a strategist in the European type of Dutch bank. “Now the question is … who will be the buyer?” The ECB reduces the balance, while private investors seem to be not interested in sovereign debt, unless it pays high profitability. If no one wants to buy, and everyone wants to sell … There is only one option: strong falls of bond prices and an intensive increase in profitability. Not everyone can endure such a situation.
Japan resigned
Some other traditional buyers retired. Japanese investors, historically, the key buyer of the sovereign debt of the eurozone, sold their participation at the end of last year, so that a faster rhythm in ten years.
Slabank evaluates that before the sale of debt, Dutch pension funds had about 457,000 million euros in government bondsAnd it is expected that the largest sales (about 69,000 million euros) will be made in German, French and Dutch sovereign duty. According to Rabobank, about 19% of the total state debt of the Netherlands belongs to Dutch pension funds compared to 8% of German bonds. The highest property coefficient corresponds to a long -term relationship.
In the face of the transfer from pensions, the Dutch funds increased the use of coverage at the expense of bonds and Swaps to protect the rate of benefits of their members in accordance with any shock at interest rates or falling on the stock market. “This generates complex dynamics: on the one hand, it is recommended to increase the coverage of interest rates until the transition date, and then the opposite operation is performed as quickly as possible so as not to be the last,” says Tucker.
The moment is still unclear. Some pension funds have already postponed the transition date, including PME, a plan of 60,000 million euros for workers in the metallurgical and technological industry. However, according to analysts, hedge funds position themselves in order to benefit from the transition. “Everyone is trying to take advantage of this,” says Lin Graham Tylor, senior Rabobank strategist of types, and adds that he was focused on trying to determine “how many long-term types and how much is already included in the price?”
