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Swedish National Debt Office To Introduce New 10-Y Loan

ByDanske Markets
Published 02/04/2014, 07:57 AM
Updated 05/14/2017, 06:45 AM

This week, the Swedish National Debt Office (SNDO) will introduce the previously announced new 10Y index-linked loan SGBi3109. In terms of maturity, the loan matches SGB1058 almost perfectly (set to mature on 1 June 2025) and on the same day/month as SGBi3107 (June 2017)/SGBi3108 (June 2022) and will thus have the same seasonal factor. The coupon rate is set at 1% and the ISIN code is SE0005703550. As with other recently launched index-linked loans, the notional has a deflation protection that covers the notional amount (although coupon payments are not deflation protected). However, the value of that protection is small unless one expects a very negative long-term scenario.

The loan will fit in between SGBi3108 and SGBi3104 (December 2028). In our view, the new loan will help bridge the previously large gap to SGBi3104 and should thus help liquidity in the long end of the index-linked curve.

The loan will be launched through an ordinary SEK1bn auction but three exchange auctions are scheduled (see table below). The net risk effect of the three exchange auctions is a net supply of risk to the market corresponding to SEK1.7bn in SGBi3109, adding up to a net supply of risk equivalent to SEK2.7bn in SGBi3109.

To Read the Entire Report Please Click on the pdf File Below.

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