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Eksportfinans Halts Commercial Paper Lending Amid Resolution

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Nov. 28 (Bloomberg) -- Eksportfinans ASA, which was downgraded to junk this month by Moody’s Investors Service, will stop selling commercial paper and is ceasing issuance of subordinated debt after 2011 as it winds down.

“There will be no issuance of new capital contribution securities or subordinated debt,” Oslo-based Eksportfinans said yesterday in a presentation. “Existing securities and debt will be kept to contractual maturity. There will be no new commercial paper borrowings issued after 2011.”

Eksportfinans, which was set up to help foreign investors buy Norwegian goods and services, was cut seven steps to Ba1 on Nov. 22 by Moody’s after the state said it will wind down the company. The government didn’t give the lender permission to waive European capital requirements that limit lending concentrations, leaving Eksportfinans in breach of regulations. Prime Minister Jens Stoltenberg instead created a direct loan facility that will be run by Eksportfinans until July.

The lender released financial forecast through 2017 to “substantiate Eksportfinans’ previous statements that it considers itself to be well capitalized, has a good liquidity situation and that it has every intention to honor all of its obligations once they come due,” according to yesterday’s statement. “These previous statements still remain valid.”

The company’s 1 billion-euro 4.75 note due in June 2013 slumped 0.88 cents to 94.792 cents on the euro. The yield jumped 0.67 percentage point to 8.49 percent as of 12:41 p.m. in Oslo. The yield was at 1.66 percent on Nov. 21.

EMTN Default?

Standard & Poor’s also last week cut Eksportfinans five levels to BBB+ and placed the rating on negative credit watch as it determines whether the lender’s winding down and withdrawal of government support constitute a default under the terms of its euro medium-term note program.

DNB ASA owns 40 percent of the lender, while 15 percent is owned by the Norwegian government. Nordea Bank AB, the largest Nordic lender, holds 23.21 percent, and Danske Bank A/S, based in Copenhagen, owns 8.09 percent.

Eksportfinans will have 41 billion kroner ($7 billion) in bond debt by 2017, according to forecasts published yesterday. That compares with 167 billion kroner at the end of this year, the lender said. The company’s 120 billion-krone book of loans will dwindle to 21 billion kroner by the end of 2017, it also said.

To contact the editor responsible for this story: Meera Bhatia at mbhatia2@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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