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Adjusted Guidelines for Central Government Debt Management in 2015
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The Government has today decided to adjust the maturity interval for the nominal krona debt as a result of substantially lower market interest rates. The adjustment is made to restore the maturity benchmark to a risk level equal to the one established in the guidelines for central government debt management in 2015 and means that the Swedish National Debt Office can maintain their current borrowing plan.
The starting point for the Government's guideline decision is that central government debt shall be managed in such a way as to minimise costs while taking risks into account.
Market interest rates have declined substantially in the past months. This has made the duration in the nominal krona debt significantly longer than when the guidelines for central government debt for 2015 was decided in November 2014. Duration is calculated with discounting using current market interest rates.
Lower interest rates do not mean that the interest rate refixing risk or the variation in the cost of the central government debt has changed. The adjustment is made to restore the maturity benchmark of the nominal krona debt for instruments with a maturity of up to 12 years to a risk level equal to the one established in the guidelines for central government debt management in 2015. This is made by an increase in the maturity interval with 0.3 years to 2.6-3.1 years. The lower interest rates do not lead to any changes in the steering of the foreign currency debt or in the inflation-linked krona debt.
Due to the fact that the interval has to be adjusted so soon after the guideline decision, the Swedish National Debt Office will come back to the matter of the interval size in their proposal for guidelines for 2016.
The overall objective of debt policy is to minimise the cost of the central government debt in the long-term while taking risk in its management into account. The management of the debt shall be conducted within the framework of monetary policy requirements.
The Government primarily steers the expected costs for and risk in the central government debt by adopting guidelines for the composition and maturity of the debt. The Government adopts its guidelines following proposals from the Debt Office. The Debt Office is responsible for the operational management of the central government debt within the framework of these guidelines. Central government borrowing and debt management are evaluated every other year in a government communication to the Riksdag. The next evaluation will be submitted to the Riksdag in April 2016.
Guidelines for the composition of the central government debt
Foreign currency debt: Reduction of no more than SEK 30 billion per year
Inflation-linked debt: 20 per cent
Nominal krona debt is to make up the rest of the debt.
Guidelines for maturities in the central government debt
Foreign currency debt: Duration 0.125 years
Inflation-linked debt: Duration 6-9 years
Nominal krona debt:
- Instruments with maturities of up to 12 years: Duration 2.6-3.1 years
- Instruments with maturities of more than 12 years: Long-term benchmark for outstanding volume of SEK 70 billion.