Outstanding volume has increased from about SEK 500 billion ten years ago to a full SEK 3,100 billion, and this growth will continue.
"The change is nothing short of dramatic, and in these contexts Sweden is regarded as a pacesetting country," said Erik Thedéen, Deputy Director General of the Debt Office, in an address in Helsinki, Finland.
Those market players - both issuers and investors - that realised the special nature of inflation-linked bonds at an early stage are the ones that are a step ahead today. As an investor, daring to take the plunge into inflation-linked bonds in the late 1990s turned out to be a sound long-term decision. The pacesetters were those that adopted a strategic approach to their asset management.
"The growth of the inflation-linked bond market is yet another example of how it pays to dare think independently and sometimes go against the herd," Mr Thedéen said.
Inflation-linked bonds have unique characteristics that are beneficial both to issuers and investors. Both a debt portfolio and an asset portfolio will achieve better diversification by adding inflation-linked bonds. For the Debt Office, inflation-linked bonds have also helped to lower interest costs by about SEK 9 billion over the past 10 years. For investors, there is now an instrument that meets the basic requirement of all asset management: to safeguard the value of financial investments. Inflation-linked bonds should thus have a natural place in all long-term savings.
This autumn, in its yearly proposed guidelines for debt management, the Debt Office will specify what share of the government debt should consist of inflation-linked bonds.
For further information, please contact:
Erik Thedéen, Deputy Director General,
tel: +46 8 613 46 46
Marja Lång, Head of Communications and Public Affairs,
tel: 46 8 613 46 54
See OH-slides on www.rgk.se
