The Netherlands’ long-term borrowing costs crept up as it sold bonds one day after the collapse of the Dutch government when it could not agree budget cuts that are needed to meet stringent European Union budget limits.
However, notwithstanding the political problems, investors were keen to buy the bonds given the Netherlands’ triple-A credit rating – a rarity in Europe – and economic fundamentals including a trade surplus, and relatively low debt and unemployment.
The crisis has created a political vacuum, worrying financial markets and the Moody’s rating agency.
Moody’s ratings agency said on Monday the government’s collapse was a negative factor for the country’s credit but maintained its Aaa rating with a stable outlook.
But it said if the country weakened its commitment to fiscal discipline, the rating could face downward pressure.