Eksportfinans ASA has no plans to continue operating once it has wound down its loan book and paid off all outstanding debt following Norway’s decision last year to pull its support, the company’s chief executive officer said.
The lender, created half a century ago to help finance Norwegian exporters, doesn’t have a strategy to continue after it winds down its current debt, CEO Gisele Marchand said yesterday in a telephone interview from Oslo. The question whether to continue was “hypothetical” and “long in the future,” she said.
Norway in November decided to cut its support for Oslo- based Eksportfinans after rejecting the lender’s pleas to sidestep European capital rules limiting large loans to single industries. The move led Moody’s Investors Service to downgrade the Aa3 rated company to junk, roiling investors in the company’s $39 billion in bonds as far away as Japan.
Eksportfinans’ Chief Financial Officer Geir Ove Olsen said in a March interview that the company was exploring ways of keeping its business running and that it would have “strategy discussions” with the board to assess its “alternatives.”
Moody’s finished the company’s review this week and confirmed its Ba1 rating, after judging that “the short-term uncertainty surrounding Eksportfinans’s ability to adequately manage its risks whilst running down its loan portfolio has decreased.” Still, it kept a “negative” outlook because the lender “continues to face substantial longer-term risks whilst running down its loan portfolio, especially due to its limited access to capital markets,” Moody’s said.
According to Marchand, the company doesn’t need funding and is in a situation “where we will be able to honor our outstanding debt” and where capital “will be intact.”
Eksportfinans’ bonds have rallied from the trough triggered by last year’s ratings downgrade. The yield on the company’s 4.75 percent 1 billion-euro note maturing in 2013 eased to 2.73 percent today, from a Nov. 30 high of 10.5 percent.
Eksportfinans has rejected speculation it may already be in default as claimed by one investor last year, and “we haven’t heard anything since then,” Marchand said.
“The situation has been much calmer in the second quarter of this year,” she said. “Few questions from investors -- and also the pricing of our debt has gone in the right direction.”
Norway announced in April it would form a fully state-owned lender to fund export credits to replace Eksportfinans, supporting the new company with as much as 40 billion kroner in direct loans. The government has defended its move to remove support from Eksportfinans as necessary to safeguard financing for the country’s exporters.
Eksportfinans is 15 percent owned by the government. DNB ASA (DNB), the country’s biggest bank, holds 40 percent, while 23 percent is held by Nordea Bank AB (NDA), the largest Nordic lender. Danske Bank A/S (DANSKE) in Copenhagen owns 8.09 percent.
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