Gradual increase of long-dated bonds

14 November 2011 - Press release

The Government has decided on Guidelines for the central government debt composition and maturities mainly in compliance with the proposal from the Swedish National Debt Office. A change in the guidelines, decided by the Government, is that the ceiling of SEK 65 billion for funding in maturities exceeding 12 years is replaced by a benchmark of SEK 60 billion. The increase of the stock of long-dated bonds will be made gradually.

The composition of the central government debt

  • Foreign currency debt: 15 per cent
  • Inflation-linked krona debt: 25 per cent
  • Nominal krona debt: 60 per cent (residual)

Guidelines for the maturities of the central government debt

  • Foreign currency debt: 0.125 years
  • Inflation-linked krona debt: 7-10 years
  • Nominal krona debt, instruments with maturities up to 12 years: 2.7-3.2 years

Up to this date, the Debt Office has concentrated funding in nominal bonds to the 10-year segment. The new guideline for long-dated bonds leads us to revise the funding forecast from October in order to enable larger issuance in maturities exceeding 10 year than earlier planned. Since the borrowing requirement is limited, we will primarily achieve this target through exchange or buy-back auctions.

Above all we plan to raise the outstanding volume in loan 1053 that falls due in 2039. In addition, we may choose to issue in the 20-year segment by introducing a new bond that matches the inflation-linked bond 3104 maturing in 2028

Our prerequisite is that the stock of long-dated bonds will increase in a pace feasible to demand in order to limit the impact on market rates and funding costs. The offered auction volumes in outright issues and exchanges will, after a dialogue with investors and primary dealers, be based on an assessment of demand and market conditions

Before year-end, the Debt Office will revert with further information on funding in long-dated bonds.

The Government's guidelines and the Debt Office's proposal can be found at: https://en.riksgalden.se/press/publications/Guidelines/

For more information, please contact
Thomas Olofsson, Head of Debt Management, +46 8 613 47 82

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