(in billions of
guilders)
Total Bond and
Mortgage
Bonds
Issues
Mortgage
Bonds
Bonds
(incl. State
Loans)
State Loans
1976
6.3
1.4
4.9
3.2
1977
9.8
3.1
6.7
3.6
1978
10.0
3.4
6.6
3.7
1979
10.9
3.2
7.7
4.3
1980
14.6
3.1
11.5
7.6
1981
16.4
1.8
14.6
10.8
In the last months of 1981 there were some signs of a break in the
upward trend of interest rates in the money and capital markets.
Inflation in the United States began to decline, partly as a result of a
steady decline in economic activity.
We may expect that the first half of 1982 will show a slight easing in
interest rates within the Netherlands' economy. The inflation rate and
the government financing deficit will however impede a more substan
tial fall in interest rates. To change this would require a more orderly
conduct of government finances, which as well having its own effect
on interest rate levels —would create greater willingness on the part of
foreign investors to buy guilders securities. The dominant position of
the government has also persisted on the private placement market.
Financial institutions were very willing to make direct loans to the
government, since this form of investment was under-represented in
many of their portfolios.
Despite the difficult situation in the capital markets of the Netherlands
which has been outlined, FGH was able to attract long term funds
without too many problems. A total of 903 million guilders was raised,
of which 291million was through private placement and 612 million
through bearer bonds, such as mortgage bank bonds, bond certificates
and notes. The issue of bond certificates, a financial instrument with a
savings element which only was occasionally used in the past, was
restarted. The certificates form for our offices a necessary expansion of
our product mix. The sale of our mortgage bank bonds by our branch
offices also showed a very satisfactory development.
In foreign currency, partly in order to meet our external financial
requirements for other than our domestic market, we turned to the
Swiss capital market. A 50 million Swiss franc loan was obtained in
January 1981 (6Vi per cent notes 1981 payable in 1985 through 1988)
and an additional 50 million Swiss francs was raised in notes in
December 1981 (7% percent notes payable in 1986).
Mortgage business
Interest rates in the mortgage market rose once again in 1981. They
increased from roughly 12 percent in January to a peak of 13.6 percent
at the end of October and than retreated to 13 per cent at the end of the
year. The high interest rates and an economicclimate which compelled
the use of an extreme policy of selectivity towards acceptance of mort
gage applications, resulted in our outstanding mortgage loan balance
being reduced by about 45 million guilders. The value of loan applica
tions accepted was 390 million guilders, compared to 780 million
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