The Dutch debt agency said on Wednesday that it expects to borrow a lower than previously forecast 90.3 billion euros ($117 billion) next year, with more than half of that to be raised in the bond market. The Netherlands is one of the few remaining triple-A rated sovereign credits in the euro zone, which means there is plenty of appetite for its government debt, although the risk of a rating downgrade has increased.

The borrowing forecast was less than the 96.3 billion euros the agency had forecast as recently as September, thanks to the introduction of a new treasury banking arrangement with local governments. The debt agency said it would issue three new bonds, or DSLs - a 3-year DSL, a 5-year DSL, and a 10-year DSL, and left open the possibility of issuing a dollar-denominated bond again "if a funding advantage can be obtained, and given that there will be sufficient funding need."

Starting in the second half of next year, local governments will be able to invest their excess liquidity with the ministry of finance. "Inflows from local governments as a result of the introduction of treasury banking are expected to amount to 6 billion euros," the Dutch State Treasury Agency, known as DSTA, said. In its semi-annual report released earlier this week, the Dutch central bank highlighted the fragile state of the euro zone's fifth-largest economy, cutting its growth forecast and projecting the budget deficit to exceed the European Union's 3 percent limit in 2013.

Copyright Reuters, 2012