Strong demand for Swedish government bonds

11 June 2012

Market participants see a demand for secure government bonds. A trend that is clearly beneficial for Swedish government bonds.

During May, The Swedish National Debt Office issued 2.25 billion USD (about SEK 15.5 billion) in a new three-year benchmark bond to Sweden’s central bank,  Riksbanken. This was done at the lowest syndicated yield so far this year for a benchmark bond. This is a clear sign that the interest in buying Swedish government bonds continues to be very strong.

Several comments from the market participants emphasise this view. Sweden is considered a rare borrower with the highest credit rating and a strong resistance to the volatility in the Eurozone.

The timing is also considered to have been beneficial to Sweden as the Swedish National Debt Office was one of the few issuers able to offer dollar bonds with a short maturity at a time when the demand for safe haven credits is large.

Previously this year the Swedish National Debt Office issued 1.5 thousand million EUR (about SEK 13 billion) in a new three-year benchmark bond. That loan was also part of the on-lending to the Riksbank. The yield was the lowest so far to be syndicated for a three-year Euro bond.

Also this time, the lead managers noted that the demand for Swedish government bonds was strong. They were particularly impressed to see how quickly the order book filled up.

The deal was oversubscribed within the hour of the order book opening. The bids totalled to SEK 2.8 billion and came from over 80 investors.

The banks feel that this reflects Sweden's position as a safe and attractive borrower.