Norway’s Sovereign Wealth Fund Changed its Course on Greek Debt

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UPDATE – January 28, 2015: Standard & Poor’s is considering downgrading Greece’s credit. The ratings agency is concerned whether Greece can continue to service its debt.

Correction: Originally the article mentioned NBIM buying large swaths of Greek debt in 2010. NBIM had a position in Greek debt and since December 2008, the value of the fund’s holdings in Greek debt and amount has decreased dramatically since then. Second note, the value exchanged was less than 2 million NOK.

Norway’s sovereign wealth fund had a position in Greek government bonds before 2007. Bond shops like PIMCO back in 2010 still viewed Greece as too risky, seeing an eventual default or debt restructuring. In March 2012, the sovereign fund’s investments in euro-denominated Greek government bonds were exchanged for new bonds issued by the Greek government and the European Financial Stability Facility (EFSF) as part of a restructuring of Greece’s debt. Norges Bank Investment Management (NBIM), the manager of Norway’s sovereign wealth fund, voted no to the Greek debt restructuring. NBIM opposed the special treatment given to certain bondholders, being subordinated to the European Central Bank (ECB).

The deal left a sour taste in NBIM’s mouth and other bondholders. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]


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