Norway’s Folketrygdfondet, which manages the Government Bond Fund (GBF) re-introduced as a COVID-19 crisis measure a year ago, has announced the fund is now reducing its activities for the safest borrowers.
The asset manager, whose main task is to run the Government Pension Fund Norway – the domestic and Nordic investment portion of the country’s sovereign wealth fund – said the GBF would continue its work for less secure borrowers, who still had a need for financing sources in the wake of the pandemic shock.
Kjetil Houg, Folketrygdfondet’s chief executive officer, and Jørgen Krog Sæbø, the firm’s head of fixed income, said in a post on the website: “Folketrygdfondet has chosen to reduce its activity here for the time being, but we are following developments and making ongoing assessments of the needs.”
The Norwegian government tasked Folketrygdfondet with reprising the GBF – which had been operational for several years around the global financial crisis – with capital worth NOK50bn (€4.9bn) as a crisis measure when the pandemic hit last year.
By the end of 2020, the fund had invested in 90 loans issued by 66 different companies, with NOK8.4bn invested in the market.
“The GBF is working as intended and has contributed capital in an uncertain time,” said Houg and Krog Sæbø, in the post which was first published in Norwegian financial paper Dagens Næringsliv on Sunday.
“Although the market is now functioning relatively well, there is still a need for the GBF,” the pair wrote, saying that for less secure borrowers, the GBF was still playing an important role in ensuring good access to capital.
“On the other hand, we see that the market for the safest borrowers has developed positively,” the said, adding that there was great interest from investors.
Houg told IPE back in June that the government had announced the re-launch of the fund on 15 March 2020, just three days after the pandemic had escalated, and that Folketrygdfondet made its first investment just two weeks later.