Photographer: Odin Jaeger/Bloomberg

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Norway’s sovereign wealth fund, the world’s biggest, lost a record 1.17 trillion kroner ($113 billion) in the first quarter after the economic shock caused by the coronavirus pandemic triggered a sell-off in global stock markets.

The loss comes at an historic moment for the fund, as it may soon need to liquidate assets for the first time to cover Norway’s emergency spending measures. During the first quarter, government withdrawals reached 67 billion kroner. That number looks set to grow dramatically in April.

Read: World’s Biggest Wealth Fund Dragged Closer to Dumping Assets

The fund had a loss of 14.6% in the first quarter. Equities rebounded in the last days of March, when the investor was valued at 10 trillion kroner ($972 billion). As a result, the return wasn’t quite as bad as feared just a week ago. Its stock portfolio fell 21.1%, while fixed income investments rose 1.3%.

The quarterly slump was deeper than the 10.3% the fund lost in the last three months of 2008, at the height of the financial crisis. It follows the record annual return for last year that the fund presented just weeks ago, showing the speed at which the pandemic has upended markets.

“The market situation is very challenging,” said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management. “However, the fund has a long-term horizon.”

Bond Sales

The fund didn’t say how much of its portfolio was invested in stocks at the end of March. If there’s a deviation of two percentage points or more from the 70% target, it needs to rebalance. That’s likely to happen, Slyngstad said last week, pointing to a share of 65% in stocks as of March 25.

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Since the investor will probably need to sell assets to cover government spending this year, the rebalancing will happen through selling bonds rather than buying stocks, Slyngstad has said.

The fund already had to contend with government withdrawals in 2016 and 2017, when the government’s income from petroleum production slumped amid lower crude prices. But back then, the fund’s cash flow from dividends, interest payments and property rent comfortably covered it, as opposed to now.

To cope with the coronavirus, Norway’s government has pledged unprecedented stimulus measures. That’s coincided with an historic collapse in crude prices, reducing state petroleum income. Meanwhile, the fund’s cash flow is dwindling as the companies it invests in cut back on dividends, because of the pandemic.