The Kingdom of Sweden’s two-year euro bond to the Riksbank record cheap for the state

24 August 2011 - Press release

The Kingdom of Sweden issues 1 billion euro (approximately SEK 9 billion) in a new two-year benchmark bond. The loan is part of the refinancing of the on-lending in foreign currency to the Riksbank. The loan is the cheapest ever syndicated in the euro market.

The deal was oversubscribed just over three times. The significant demand can be explained by a very strong interest for safe haven assets and the lack of alternatives with two years' maturity.

– It is very pleasing to experience an historic record by, according to many of our business counterparties, for an issuer the absolutely cheapest syndicated deal ever since the introduction of the euro. The large appetite enabled us to tighten the price at execution and still achieve a broad investor base, says Maria Norström, Head of Funding.

During 2011, three of the bonds on-lent to the Riksbank fall due. As part of the refunding of the third bond maturing on 8 September, the Kingdom of Sweden issued a euro bond in the international capital market. The remaining refinancing requirement will be met by the new government bond 1055. For further information see the press release from 23 August.

Central banks bought 49 per cent of the issue. Banks, corporates and fund managers bought around 14 per cent each. The balance was sold to pension- and insurance companies. Geographically, just over 30 per cent of the bond was sold to Nordic investors. The remainder went to Eastern Europe, Continental Europe, Asia and the Middle East.

Comments from the lead managers: Swedish public finances are among the strongest in Europe and the credit risk is priced among the lowest in the world. The level achieved by Sweden is extremely tight, especially in the context of a syndicated transaction and highlights the exceptional standing of Sweden among the international investor community. The record deep sub-Euribor pricing also reflects Sweden’s very limited foreign currency funding going forward.

Issuer Kingdom of Sweden
Size EUR 1 billion
Coupon 0.875 % p.a.
Maturity 2 September, 2013
Price 99.897 %
Yield 0.927 % p.a.
Spread versus Euro mid swaps               minus 55 basis points
Lead managers Danske Bank, Goldman Sachs International and Nordea Markets

 

For more information, please contact:
Maria Norström, Head of Funding, +46 8 613 46 35