Sweden Plans 20-Year Bond, Puts Inflation-Linked Bond on Hold

Sweden will issue a new 20-year nominal bond through debt exchanges in response to interest from potential investors, the Swedish National Debt Office said.

“In order to create liquidity in the new loan, the volume should quickly be raised to 10-20 billion kronor ($1.5 billion- $2.9 billion),” the agency said. “As our borrowing requirement is limited, the introduction will be made through exchanges.”

Plans for a 30-year inflation-linked bond have been put on hold due to a lack of investor interest, the agency said.

Demand for Swedish bonds has surged during the financial crisis as investors dumped euro asset. The country is tapping longer maturity bonds to lock in borrowing costs. Sweden’s 10- year notes yield about 24 basis points less than German debt with a similar maturity.

Sweden’s general government debt will dwindle to 35.9 percent of gross domestic product in 2012, compared with 90.6 percent for the euro area, the OECD said last month. The economy will expand 4.1 percent in 2011, more than twice the 1.6 percent rate in the euro area, the group said.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

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

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