Swedish bond yields eased the most relative to German bunds in more than three weeks in Stockholm trading after the government raised 21.6 billion kronor ($3.4 billion) by selling its remaining stake in Nordea (NDA) Bank AB.
The extra yield investors demand to hold Swedish 10-year bonds over similar-maturity German bunds narrowed to 62 basis points today, the smallest gap since Sept. 2, according to data compiled by Bloomberg. The spread narrowed for a fourth day.
“There are reasons to lower national debt to be better prepared for future crises,” Financial Markets Minister Peter Norman told reporters in Stockholm today. “The focus of the government has therefore been to sell the state’s shares in Nordea.”
The narrowing of the spread helped erase some of the losses investors in Swedish bonds have endured in 2013. The country’s AAA rated debt slumped earlier in the year after a recovery in the euro area reduced demand for haven assets. Sweden’s economic revival also drove its yields higher.
The 10-year spread to Germany widened earlier this month to 71 basis points, the most since August 1999. Swedish bonds with a maturity of more than 10 years have slumped 9.4 percent this year, according to Bloomberg/EFFAS indexes. That’s the worst performance among the 26 indexes tracked by Bloomberg. In 2011, Swedish longer maturity bonds surged 31 percent, and they were little changed last year.
The government sold a 7 percent stake in Stockholm-based Nordea, the Nordic region’s largest bank, as part of a broader plan to divest state assets and reduce debt. Some 284 million shares were sold to domestic and international institutional investors at 76 kronor per share.
While the krona initially strengthened on the share sale as traders anticipated inflows, it sold off after a report showed consumer and manufacturing confidence weakened this month.
The consumer confidence index fell to 98 from 98.8 in August, the National Institute of Economic Research said. The index was seen rising to 100.2 in a Bloomberg survey of eight analysts. A manufacturing confidence index fell to 94.2 from 100.7, missing the estimate of 100.6.
The krona fell the most against the euro since Sept. 5, losing as much as 0.79 percent to 8.691. Against the U.S. dollar, the krona weakened as much as 0.6 percent to 6.4403.
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