Sweden Sticks to Nominal Bond Sales Target as Europe Crisis Ebbs
Sweden kept its target for this year’s bond sales as the export-dependent economy is showing signs of recovering from the European crisis.
The National Debt Office retained its October estimate for bond issuance of 74 billion kronor ($11.8 billion) this year, according to a statement published today in Stockholm. The agency expects to issue 84 billion kronor in bonds in 2014, also matching its previous estimate, according to the statement.
Europe is showing signs of surfacing from the darkest hours of its debt crisis, reducing demand for the safest assets as investors return to higher-yielding markets. A recovery in the euro area also bodes well for export-reliant nations such as Sweden, where the central bank kept its main lending rate unchanged at 1 percent this month.
Growth in the Nordic region’s biggest economy, which sells about half of its output abroad, will accelerate to 1.4 percent this year and 2.4 percent in 2014, compared with 0.7 percent in 2012, the debt office said. Unemployment will rise to an average 8.2 percent this year before easing to 8 percent in 2014.
Sweden’s central government will post a budget deficit of 165 billion kronor this year and 63 billion kronor next year compared with its October deficit forecasts of 55 billion kronor and 56 billion kronor, respectively, the agency said.
The central bank in December said it will need to increase its foreign reserves by 100 billion kronor to create a buffer against the banking industry’s foreign borrowing. The bank said then the move was necessary to guard against the “uncertain situation” in the global economy.
The debt office will boost foreign currency borrowing to 137 billion kronor from a previous estimate of 50 billion kronor.
“The bulk part of the increase is in foreign currency due to the on-lending to the Riksbank’s foreign exchange reserve,” the office said.
Inflation-linked issuance will be 12 billion kronor in 2013, up from a previous estimate of 9 billion kronor.
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