News 24 August 2011
The Debt Office has received questions if the new government bond, with the purpose of on-lending to the Riksbank’s foreign reserve, should be seen as an isolated case or if it will be a regular feature in our borrowing.
The approach for issuing the new loan this time was determined by the cost benefits with the restriction that we borrow in government bonds with reasonable predictability. We announced in our borrowing forecast by 2010 it might be time to take up krona loans as part of the financing of on-lending to the Riksbank. At this point, we also considered that the limited volume combined with the strong demand for Swedish government bonds would allow the borrowing without disrupting the market.
It is possible that we do something similar in the future. If it would be the case, it requires that we determine that it can be done without major market disruptions. Caution is very important to us. That was partly the reason we decided to do a limited volume in the krona market. That is also the answer to why we did not do the whole borrowing in this way but also gave out a Eurobond.
We welcome comments on our approach.
We can then publish a clarification on what the market can expect when we publish our next forecast on 25 October 2011.
Questions answered by:
Thomas Olofsson, Head of Debt Management, telephone +46 8 613 47 82