Guidelines for central government debt management 2016
The guideline decision 2016 means a slight extension of the maturity of the central government debt. The maturity of the nominal krona debt is extended by three months and the maturity of the foreign currency debt by four and a half months (measured as duration). The reason why this steering is aiming at a slightly longer maturity than before is that the difference in cost between short-term and long-term borrowing has decreased. By extending the debt, the risks can be reduced at a low or no cost.
The degree of flexibility in maturity steering is increased by widening the maturity interval for the nominal krona debt from 0.5 years to 1 year and by a maturity interval of 1 year replacing the previous maturity benchmark for the foreign currency debt. This more flexible steering makes it possible to avoid unnecessary transaction costs and is justified on purely operational grounds. The decisions on the changes in maturities and how to steer them match the proposals made by the National Debt Office.
The steering of the composition of the central government debt between the three different types of debt is retained unchanged.
The maturity of the debt is to be steered towards:
- Foreign currency debt: duration 0‒1 years
- Inflation-linked krona debt: duration 6-9 years
- Nominal krona debt:
– Instruments with a maturity of up to 12 years: duration 2.6‒3.6 years
– Instruments with a maturity of more than 12 years: long-term benchmark for the outstanding volume of SEK 70 billion
The composition of the debt is to be steered towards:
- Foreign currency debt: A reduction of up to SEK 30 billion per year
- Inflation-linked krona debt: 20 per cent
- The nominal krona debt is to make up the remaining share.