Bloomberg News

Norway Proposes to Raise $17 Billion in 2013 Long-Term Loans

November 09, 2012

Norway’s Finance Ministry plans to boost its sale of government bonds next year as the world’s fourth-richest country per capita raises spending of its oil wealth and an economic expansion slows.

The ministry requested authorization to raise 100 billion kroner ($17 billion) in long-term domestic loans next year, it said in a statement on its website. This compares with 70 billion kroner this year. The maximum outstanding amount of treasury bills in 2013 is proposed at 250 billion kroner.

Norway is increasing bond sales as the AAA rated nation has emerged as a haven from Europe’s debt crisis. The government has proposed boosting spending of its oil wealth next year to support mainland economic growth, which is estimated to slow to 2.9 percent from 3.7 percent this year.

“There will be great demand from international investors,” Nils Kristian Knudsen, a rate and currency strategist at Svenska Handelsbanken AB in Oslo, said by phone. “Especially due to the strong economic performance in Norway and the relative worsening situation in the euro zone, this should be a good investment going forward.”

Yields Rise

Norway, which is Europe’s second largest oil and gas exporter, boasts the biggest budget surplus of any AAA rated nation. The nation, which is not a member of the European Union, has largely been shielded from the financial crisis thanks to record offshore investments.

Norway’s mainland economy, which excludes oil and gas revenue, will grow 3.75 percent this year, according to central bank estimates. This compares with an expected 0.4 percent contraction, according to the European Commission.

The yield on Norway’s benchmark 10-year bond rose four points to 2.06 percent by 1:30 p.m. in Oslo.

The increased bond sales “should be positive for the Norwegian krone,” Knudsen said. “We often hear that investors are telling us the market is too small, so everything that works in the opposite direction should be well received.”

The krone was little changed at 7.3006 against the euro by 12:22 p.m. in Oslo after reaching a two-month high earlier today. The currency, which has offered refuge to investors fleeing Europe’s debt woes, hit a nine-year high versus the euro in August. It fell 0.3 percent versus the dollar at 5.7388.

The Finance Ministry and the central bank will publish a 2013 auction calendar in December.

To contact the reporter on this story: Josiane Kremer in Oslo at jkremer4@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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