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Message Subject Norway Faces Liquidity Shock in Record Redemption!!!
Poster Handle Anonymous Coward
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Norway’s bond haven is about to become a lot smaller.

The government is preparing to repay a record 66.5 billion kroner ($11.8 billion) in 6.5 percent bonds maturing May 15, which is more than the top-rated nation has left to sell of its planned 70 billion kroner in issuance this year.
The redemption threatens to trigger an outflow of funds as foreign investors balk at the loss of liquidity, driving up existing debt prices and weakening the krone, according to analysts at Nordea Bank AB (NDA) and Danske Bank A/S. (DANSKE) Offshore investors own almost 60 percent of the maturing bonds, or about 38 billion kroner, Nordea estimates.

“The amount involved means that this flow could have a substantial market impact,” said Gaute Langeland, chief analyst at Nordea Markets in Oslo.

Norway, which boasts the biggest budget surplus of any AAA rated nation and has no net debt, emerged last year as a haven from the euro area’s debt crisis. Demand for assets perceived as safe from Europe’s debt crisis returned this week after an inconclusive election in Italy fueled speculation the nation may backtrack on austerity measures.

Norway’s 10-year yields slid seven basis points yesterday and a further two basis points today to 2.42 percent. The yield had jumped from a low of about 1.61 percent in July last year and about 2.14 percent at the start of the year. The yield on Norway’s 2015 note has rallied to about 1.52 percent, down from a high of 1.78 percent last month.
[link to www.bloomberg.com]
 
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