Norway Buys Greek Debt as Sovereign Wealth Fund Sees No Default

Sept. 9 (Bloomberg) -- Norway, which has amassed the world’s second-biggest sovereign wealth fund, says Greece won’t default on its debts.

The Nordic nation’s $450 billion Government Pension Fund Global has stocked up on Greek debt, as well as bonds of Spain, Italy and Portugal. Finance Minister Sigbjoern Johnsen says he backs the strategy, which contributed to a 3.4 percent loss on European fixed income in the second quarter, compared with gains on bonds in Asia and the Americas.

“The point is, do you expect these guys to default?” said Harvinder Sian, senior fixed-income strategist at Royal Bank of Scotland Group Plc, in an interview. “Norway has taken the view that they will not. The Greek holdings are particularly interesting because the consensus in the market is that they will at some point restructure or default.”

Norway says its long-term perspective will protect it from losses. “One could say we are investing for infinity,” Johnsen said in an Aug. 27 interview. “It is important when you look at the time scope of the fund and the investments that there should be a portion of active management.”

The fund, which manages Norway’s oil and gas wealth, mostly buys securities in proportion to their importance in global indexes. By using its leeway to stray from those benchmarks using so-called active management, the fund has beaten those measures by an annual average of 0.3 percent since 1998.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aKkAnJYH0Ey4&pos=1

 

Yeah, looks like there are other buyers of EUR periphery around. It's not just the Chinese. This is a pretty significant vote of confidence, I think.

 

If I had $450billion to invest I'd buy some Greek govt debt as well because with that money you've pretty much got to buy everything that's liquid.

Anyway, the announcement is probably politically motivated to show there are some serious buyers out there.

 

yes because the chinese dont make financial mistakes

 

That's right... On a time horizon meaningful to me, the Chinese don't make mistakes, because of the sheer size of their reserves. Whatever they do, that's the mkt. The mkt is always right. Hence my conclusion.

All this applies to govt debt.

 

The Norwegians nailed the bottom of 09 pretty accurate.

I remember reading an interview with one of the heads of the funds in which he stated he hoped he was right and it was a/the bottom...

Kind of similar to my own aproach on investing.

 

There is enormous liquidity out there and insurance companies and pension funds are scrambling for yield. Not to mention sovereign wealth funds...

 

No need :

Business and household deposits in June fell for a sixth straight month to 216.5 billion euros ($277.3 billion) from 238 billion euros at the end of 2009, according to figures from the Bank of Greece.

 

Sovereign wealth funds piling in to a risky asset with shaky fundamentals - what could possibly go wrong?