Swedish bonds are safest in the world, says ING
21 January 2013 Sweden
Image: Shutterstock
For default risks, ING Investment Management has judged the Swedish government bond market to be the safest bond market in the world, predicting Sweden will keep its safe haven status for the foreseeable future.
After 10 years of data analysis using its proprietary scoring matrix, ING Investment Management found that in all but one year, Sweden ranked first in the world when looking at sovereign credit risk factors such as solvency risk and external dependency, as well as environmental, social and governance issues in order to gauge both the ability—but also the willingness—to service debt.
Thede Ruest, fund manager at ING Investment Management, said: “The top three spots have consistently been taken by the Nordics —Sweden, Denmark and Finland—making it the bond market’s credit safest region in the world in the last decade."
"Sweden’s debt-to-gross domestic product (GDP) ratio stands below 40 percent and is one of the lowest in the world. The country is amongst the few high-income countries that in its recent past have been able to generate government surpluses."
Ruest added that Sweden’s external dependency is "very low due to its large and sustained current account surpluses—most recently at around 7 percent of total GDP".
"Sweden, unlike members of the European Monetary Zone, has its own country specific policy framework (fiscal, monetary and macro prudential) and its 'own' currency—the Swedish krona—that allows for substantial flexibility to control funding costs.”
ING IM stated that it does not imply that the Swedish government bond market is entirely risk free, citing high household leverage as the key risk to the financial sector.
After 10 years of data analysis using its proprietary scoring matrix, ING Investment Management found that in all but one year, Sweden ranked first in the world when looking at sovereign credit risk factors such as solvency risk and external dependency, as well as environmental, social and governance issues in order to gauge both the ability—but also the willingness—to service debt.
Thede Ruest, fund manager at ING Investment Management, said: “The top three spots have consistently been taken by the Nordics —Sweden, Denmark and Finland—making it the bond market’s credit safest region in the world in the last decade."
"Sweden’s debt-to-gross domestic product (GDP) ratio stands below 40 percent and is one of the lowest in the world. The country is amongst the few high-income countries that in its recent past have been able to generate government surpluses."
Ruest added that Sweden’s external dependency is "very low due to its large and sustained current account surpluses—most recently at around 7 percent of total GDP".
"Sweden, unlike members of the European Monetary Zone, has its own country specific policy framework (fiscal, monetary and macro prudential) and its 'own' currency—the Swedish krona—that allows for substantial flexibility to control funding costs.”
ING IM stated that it does not imply that the Swedish government bond market is entirely risk free, citing high household leverage as the key risk to the financial sector.
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