Issue decisions

The Debt Office’s policy is to create predictability and transparency in our borrowing. The issues are allocated between instruments and maturities depending on the borrowing requirement, duration targets and the need to contribute to liquidity in our benchmark loans. The approximate breakdown between instruments and maturities is announced in Central Government Borrowing, Forecast and Analysis.

Before every auction of nominal government bonds, inflation-linked bonds and T-bills respectively, a decision is made on the maturities to be issued. This decision is based on an internal issue plan decided upon at the time of publication of our forecast.

Dealers and investors have the opportunity to state their points of view before auction decisions. However, we do not enter into a dialogue with our counterparties before the decisions. Communication is valuable for us but we only receive points of view.

Government bonds

As regards government bonds, we normally comply with the issue plan – individual participants shall not be able to influence our issue decisions. However, in certain situations, assessments may agree that certain maturities should absolutely be avoided.  It may also be the case that duration targets will compel changes in relation to the issue plan. We are then able, if we find it clearly justified, to deviate from the plan. This is seldom the case, however.

Inflation-linked bonds

An explicit internal borrowing plan is also produced for inflation-linked bonds and applied in substantially the same way as for nominal government bonds. However, we apply the plan to inflation-linked bonds with somewhat greater flexibility. In this case as well, there must be a high level of agreement among assessments if we are to deviate from the plan.

T-bills

Decisions on issues of T-bills are also based on a issue plan. This is partly controlled by our policy to issue a six-month bill every IMM month (March, June, September and December) and a three-month bill the other months, and partly by our short-term funding requirement which vary from month to month. Borrowing in T-bills varies depending on seasonal variations in the funding requirement. The T-bill maturity dates are concentrated on the IMM months leading to relatively large T-bill borrowing in auctions in these months.

Our short-term funding forecast is revised continuously due to unexpected changes in our cash flows. In practice, volumes are controlled and, to some extent, also the choice of maturities by the current funding requirement. The loan plan must therefore be successively revised. There is accordingly limited scope for taking the market situation into consideration: we do not issue greater volumes than the amount corresponding to the borrowing requirement. Just as in the case of bond issues, we have some flexibility and can deviate to some extent from the loan plan if, for instance, assessments concur that certain maturities should be avoided.