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Half of Swedish government debts bought by foreign investors

Wednesday, 05 September 2012
The Swedish government debt is increasingly being bought by foreign investors such that at this moment, it is currently half-owned by foreign investors. On the whole, that is up from foreign ownership of around 30 percent in 2008.

The situation is being seen as problematic, to some extent, especially with the view that a large chunk of the state debt is being owned by foreigners.

Foreign ownership of Swedish government debt of nearly Skr1000 billion in May went up about 50 percent. That is a clear increase compared to a few years ago, and the trend is explained by the global flight to safe investments. Sweden is now regarded as such a place - give its low public debts and positive economic outlook as the best place to own the state bond .

In 2007, 35 percent of the Swedish national debt was owned by foreign investors, according to the head of the Swedish Debt management, Thomas Olofsson. The countries that borrowed to Sweden were not presented in Debt office date or data presented by Statistics Sweden.

"The level of foreign ownership has increased steadily. If that is a record, it not something I can say. When Sweden borrowed money to build their railroads in the 1800s, for example, that happened with foreign loans, "says Thomas Olofsson.

How large a proportion of foreign ownership of the country's debt is remain some thing that could be examined through a variety of views. Having many investors is good especially when a country must aims to have access to a diversified lenders.
But when more of a country's debts is owned by foreigners. it is not a very good indication especially if the country's economic stability begins to be threatened.

Italy and Spain have today a comparative foreign ownership of bonds at 40 and 30 percent respectively. The level has decreased as the crisis of the countries makes it that more of them try to reduces their risks by carrying out large selling pressure in case the ECB starts buying government bonds.

However, Swedish officials are not worried bout the Swedish situation where foreign ownership is increasing. Thomas Olofsson feels that "We're trying to borrow globally and it is important to have a diversified base. We have absolutely no desire to either increase or decrease the proportion of foreign ownership in the Swedish national debt and we would not likely face of a crisis, it is good that we now have a relationship with the foreign investor who knows who we are."

In Finland the ownership of the state debt if held 85 percent by foreigners. The proportion is higher in Finland partly because the country is in the euro single currency area, and it could indicate that the country has a loyal domestic investor base.
by Scancomark.se Team

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