Riksgälden; Swedish National Debt Office Considering New Long-term Bond

The Swedish National Debt Office is investigating the possibility of issuing a new long-term nominal government bond. The first issue may take place during the first quarter of 2009.

The Debt Office aims to minimise the long-term costs of central government debt without assuming unwarranted risks. The preconditions for central government borrowing are currently characterised by low interest rates and an increased borrowing requirement.

Small borrowing requirements have previously limited the possibility of issuing loans with a long time to maturity. Considering current estimated borrowing requirements, there is scope to issue new loans. The low interest-rate level also means that longer borrowing may prove rather inexpensive. The risks associated with central government debt will at the same time be reduced, as most of the debt will be financed long-term at a fixed interest rate.

The Debt Office will make a definite decision about a new bond after consulting the market. This dialogue will seek to establish a basis for a decision on volume, time to maturity, interest-rate level and the forms of sale.

Our point of departure is that a twenty-year nominal government bond maturing on 1 December 2028 would be of interest to both ourselves and to the market. Such a bond would have the same maturity date as the inflation-linked government bond '3104'. This should prove positive for both the pricing and liquidity of both types of debt. The time to maturity is long enough to attract investors seeking to extend the time to maturity of their assets. At the same time it fits in well with our current maturity structure and previous introductions of long nominal bonds. There is a risk that an even longer time to maturity would lead to poorer pricing and liquidity. A twenty-year time to maturity should also have a positive effect on the development of the swap market.

We would like the bond to attain sufficiently large volumes to provide satisfactory liquidity. The volume may be of the magnitude SEK 40 billion. It is not impossible that the volume could be set at a higher level in the event of great interest.

Regarding interest-rate levels, it should be emphasised that the conditions for issuing a new long-term bond are based on the interest-rate situation that has prevailed over recent weeks and that a twenty-year bond may, for instance, be issued at interest-rate levels close to the ten-year bond interest rate. If it shows that no interest is attracted, there would no longer be any reason for us to issue a new long-term loan.

For further information, please contact: Thomas Olofsson, Head of Funding, +46 8 613 47 82

This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

Riksgälden

http://www.rgk.se/

Stock Identifier: SSE.RIKS