(Adds guidance, funding requirement, background)
By John Geddie
LONDON, Jan 24 (IFR) - Sweden mandated banks for a five-year
euro bond on Thursday, as the country gets started on plans to
strengthen its foreign currency reserves.
The Kingdom, rated Aaa/AAA/AAA, hired Danske Bank, Goldman
Sachs International, J.P. Morgan and Royal Bank of Scotland as
joint lead managers for the planned bond issue, just days after
its central bank ordered the debt office to raise an extra
SEK100bn (USD15.4bn) in international capital markets in 2013.
Guidance on the new bond has been set at mid-swaps minus
18-20bp, banks managing the deal said.
The additional funding requirement means Sweden now has to
issue SEK160bn in foreign currency debt in 2013 - likely to be
in euros or US dollars - which is a sizable increase on the
SEK112bn issued in 2012.
Initially, the country forecast it would only have to raise
around SEK60bn this year through commercial paper and foreign
But on Tuesday, Sweden's central bank, known as the
Riksbank, announced plans to bolster its reserves in case its
ability to fund deteriorates.
Following the Riksbank's announcement, the debt office
subsequently revised its funding forecast to reflect a new total
gross borrowing requirement of SEK403bn.
The debt office has already voiced its opposition to the
precautions taken by its central bank.
"The National Debt Office's opinion, however, is that it is
wrong that a decision by a public authority can increase the
government debt by three digit billion amounts without a clear
framework. This decision-making undermines the parliament's
control over the government finances," said debt office director
general, Bo Lundgren, on Tuesday.
" the National Debt Office does not share the
Riksbank's concerns that our ability to fund may deteriorate."
Sweden's last international bond issue was back in October
2012, when it launched a USD1bn three-year bond that priced at
the tightest spread to Treasuries for an SSA issuer all year.
Barclays, Citigroup and Deutsche Bank priced the 0.375%
December 2015 bond at mid-swaps minus 7bp, equivalent to just
4.75bp over the October 2015 Treasury, on the back of USD1.5bn
(Reporting By John Geddie, editing by Natali Harrison, Julian