Bloomberg News

Norway Oil Fund Rejected Greek Debt Swap, CEO Slyngstad Says

March 16, 2012

Norway’s sovereign-wealth fund rejected the Greek debt swap because it disagreed with the different treatment given to the European Central Bank, according to chief executive officer Yngve Slyngstad.

“It’s very important to create trust in the markets,” Slyngstad said in an interview in Oslo. “To create trust you have to stay by the rules and therefore to give preferential treatment or to give collective-action clauses retroactive use is challenging. We said ‘no’ on a principle basis.”

Greece reached its target for participation in the restructuring after using the so-called collective-action clauses to force the hand of holdouts, with investors accounting for at least 95.7 percent of the bonds taking part. The ECB was exempted from taking losses on its holdings, while the European Investment Bank was also said to be spared writedowns, according to two officials familiar with the matter.

“The whole thing has been done with a great deal of contempt for the rule of law,” said Marc Ostwald, a fixed- income strategist at Monument Securities Ltd. in London. “Long- term investors are not going to get involved with the periphery for a long time. It’s not surprising.”

Holdings Cut

The Norwegian oil fund’s holdings in Europe’s most indebted countries declined by 39 percent last year amid a worsening of the sovereign debt crisis, Slyngstad said at a press conference today in Oslo. The $600 billion Government Pension Fund Global cut its holdings of the securities issued by Europe’s so-called periphery to 57 billion kroner ($9.88 billion) at the end of 2011, from 94 billion kroner at the start of the year.

European leaders have been struggling to contain a debt crisis that started in Greece in 2009, leading to bailouts of that country, Portugal and Ireland. ECB President Mario Draghi gave banks more than 1 trillion euros ($1.31 trillion) in three- year loans in December and February to help calm markets after yields in Italy and Spain climbed to euro-era records last year.

Norway’s government bonds handed investors a return of 7.9 percent over the past year as investors sought a haven from the region’s debt crisis, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.

To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at Josiane Kremer in Oslo at

To contact the editors responsible for this story: Daniel Tilles at; Jonas Bergman at

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