Proposal for review of rules for state agencies investments at the Swedish National Debt Office

Press release 31 October 2000

The Swedish National Debt Office (SNDO) proposes to the Ministry of Finance that state agencies that conducts active or long term asset management should invest in ordinary government bonds and no longer be directed to accounts at the Cash Management Department at the SNDO. The Cash Management Department acts as an internal bank for state agencies and is designed to handle traditional cash management, not substantial or active asset management.

The proposed review referes to the general rules, but the state agencies presently affected are The Deposit Guarantee Board, The Premium Pension Authority and The Swedish Nuclear Waste Fund. These agencies normally manage funds of some 40 to 50 billion kronor. Of the total funds of some 23 billion kronor that The Swedish Nuclear Waste Fund manages, some 20 billion kronor is invested at a real rate of return.

The proposal means that especially the market for inflation-linked bonds would get a number of new investors, and possibly a higher turnover and greater liquidity. The technical aspects of the reform must be investigated, but it is possible that outstanding volumes of government bonds - inflation-linked as well as traditional ones - and market indicies could be affected.

The need to review these rules has been brought to the fore by an inquire from The Premium Pension Authority to place funds at a real rate of return at the SNDO. Pending the proposed review, the SNDO and The Premium Pension Authority intends to investigate the possibility to find a transitional solution within the existing framework.

For further information: Thomas Franzén, Director General, tel: +46 8 613 46 51 Pär Nygren, Director and Head of Cash Management Department, tel: +46 8 613 47 44