Auction volumes in government bonds unchanged after sale of state assets

Press release 19 June 2013

A total of SEK 20.4 billion from the sale of shares in Nordea and Vectura will, in the near term, be handled in liquidity management and by lower volumes in Treasury bills. The Debt Office will gradually use the income to repay maturing loans. Supply of government bonds continues to be stable.

The Debt Office will maintain the auction volume of government bonds at SEK 3.5 billion in 2014 as well. Borrowing in foreign currency will decrease. The revenue from the sales transactions will reduce the funding requirement and the national debt. Primarily, this is an effect of the capital contribution the Swedish state made to Nordea during 2009.

- The Swedish model of handling banks in distress has proven to be successful. Swedish taxpayers took a risk in financing Nordea. Now part of the holding has been sold and given a profit of 2.8 times the money. The total surplus from the government actions in supporting Swedish banks in the aftermath of the 2008 crisis amounts to SEK 20 billion, says Hans Lindblad Director General of the Swedish National Debt Office.

Stability Fund

The governments holding in Nordea is divided into two parts. Just under half is held by the Ministry of Finance. The remainder is kept in the stability fund, managed by the Swedish National Debt Office. However, the Ministry of Finance exercises the ownership of both parts.

Since the sales are proportionally distributed between the stability fund and the governments other holding, more than half of the proceeds will be added to the stability fund. The remainder is transferred to the state budget. Since the stability fund is not invested in securities but kept in an account at the Debt Office, the consequence will be that the borrowing requirement is also reduced for this part of the payment.

- It is essentially sound that the stability fund is now selling part of its holding in Nordea. Bank shares is not an asset that should be held in a fund that will be realized during a financial crisis, says Director General Hans Lindblad.

The shares in the stability fund were acquired during the financial crisis of 2009 when the government took part in Nordea's rights issue through the capital infusion programme. The Debt Office acquired more than 7 percent of the shares in Nordea for a total of SEK 5.6 billion. Just under half of those shares are now being sold. The sale will bring SEK 10 billion to the stability fund. In total, the fund has realized a profit of SEK 7.5 billion for this sub-item. The remaining shares in the fund after today's transaction have a value of SEK 11 billion, based on today's purchase price.

For more information:
Questions on funding Maria Norström, Head of Funding, +46 8 613 46 35
Press Contact Linda Rudberg, +46 8 613 45 38