Norway’s Fund and Asset Management Association and the country’s main trustee are setting up a pricing service for bonds to foster transparency and growth in the Nordic region’s largest junk bond market.
The group and the Norwegian Trustee, which acts as an agent for investors, have established a company called Nordic Bond Pricing that will publish independent prices on bonds, the Oslo-based group said in a statement.
“The establishment of Nordic Bond Pricing will make life easier for our members and help all investors,” Lasse Ruud, chief executive officer at the group, said in the statement.
Norwegian corporate bond issuance has surged over the past years in part as investors seek higher returns and as companies seek to fund record investments offshore Norway. Western Europe’s largest oil producer has emerged as a haven from Europe’s debt crisis.
The group said that among the members that will promote the bond pricing service are Government Pension Fund Norway and other pension funds. At first the pricing will be done on a weekly basis, with a goal of expanding it to a daily service. It will only provide closing prices.
Corporate issuance jumped last year to a record 96 billion kroner ($16 billion), surpassing the previous record year of 2007 when companies sold bonds for 83 billion kroner, according to Nordea Bank AB. Sales of investment-grade debt surged to 44 billion kroner in 2012, up from 15 billion kroner the previous year, while high-yield bond sales climbed to 52.1 billion kroner from 31 billion kroner, the bank’s data show.
The pricing service comes after Nordea and DNB ASA, Norway’s biggest bank, also this year started new daily Norwegian bond return indexes to also foster transparency.
Nordea’s Norwegian aggregate bond index has returned 1.39 percent this year, as of yesterday, while DNB’s High Yield Total Return Index is up 3.95 percent.
There were 105 corporate bond issuers in the Norwegian market last year, second only to 2007 when there were 114, 39 of which were new to the market, according to Nordea.