NORWAY: Q3 BLS: Credit Demand Expected Unchanged In Q4

• Guidance: 2.90% Aug-54 Bund + 19.5 to 22.5bps (prelim initial spread guidance was +18.5 to 22.5bps)
• Size: E4.0-5.0bln will be on offer (MNI assume takeup at the top of the target range)
• Books in excess of E10bln
• Maturity: 15 January 2056
• ISIN: NL0015002P70
• The preliminary initial spread guidance is 2.90% Aug-54 Bund + 18.5 to 22.5bps.
• MNI expect books to close between 10:00BST / 11:00CET and 11:00BST / midday CET.

SEK swap rates are down 3bps to 1.99% following the rate decision off knee-jerk lows of 1.98%.  A reminder that the decision was near enough a 50/50 between a cut and a hold. That’s filtered into some very light SEK weakness. The muted market reaction is fair – one more 25bp Riksbank cut was fully priced over the next few months, today’s decision just brings that forward.

• The September MPR rate path is flat at 1.75% through to Q3 2026 before starting to slope upwards. We had wondered whether the Board would include some implied probability of another cut after today’s rate move – but clearly that would complicate the message that this is likely to be the last cut of the cycle barring any unexpected shocks.
• The rate path slopes upward at a steeper rate than in June, back above 2% by the middle of 2028. We suspect that this reflects the more expansionary fiscal stance following the 2026 budget, but as always caution reading into the mid/long-end of the path as a policy signal (it’s the output of staff models, and not “owned” by the Executive board”).

Additional decision on the balance sheet

• "To maintain a good ability to trade bonds quickly, the Riksbank decided in November 2024 to establish a securities portfolio of Swedish nominal government bonds totalling SEK 20 billion. To facilitate efficient trading, the Riksbank has now decided that the holding will be allowed to fluctuate between SEK 18 and 22 billion. The portfolio will also be complemented by the ability to conduct repurchase agreements in the form of repos and reverse repos."
• "The Riksbank will conclude its ongoing sale of Swedish nominal government bonds when the securities portfolio reaches a value of SEK 20 billion. This is expected to happen in December 2025. After this, the Riksbank will start trading in the securities portfolio. Further information will be provided towards the end of 2025."

We discussed in our preview Governor Thedeen's recent speech on the balance sheet and SEK excess liquidity. The speech set the stage for some tweaks to the Riksbank's secondary rates, which we anticipated could come in November or December. This announcement guides towards more details in Q4. See our preview for more details