Norwegian fund industry establishes daily bond pricing facility
The Norwegian Fund and Asset Management Association (Verdipapirfondenes forening) and Norsk Tillitsmann are jointly setting up a new company – Nordic Bond Pricing – to offer more efficient publishing of bond pricing data to the market.
Investors in bonds, such as fixed income funds, currently have to calculate the market value of Norwegian instruments, which are not always traded daily. This is complicated and expensive, VFF said.
Ragnar Sjoner, CEO of Norsk Tillitsmann, said the company “had 20 years of experience as a third party in the fixed income market, and we believe that this is an important step to further improve efficiency and levels of professionalism in this market.” He added that this type of service exists in many other countries.
The Norwegian bond market has grown strongly in recent years, and the market for corporate bonds is the most developed in the Nordic region, VFF said. Further growth is expected, in part because of increased capitalisation requirements put on banks. A bigger share of the financing of the private sector is expected to be done through companies issuing bonds.
Lasse Ruud, managing director of VFF, said: “The establishment of Nordic Bond Pricing will simplify daily activities of our members, and reassure all investors.”
Ruud adds that even investors that are not members of VFF will benefit from the establishment of the new service. Currently VFF offers weekly pricing of the local bond market, based on data from brokers. The weekly data will continue to be issued by Nordic Bond Pricing to start with, but it will develop daily pricing based on end of day prices. There are no plans to develop intra-day pricing services. However, it is envisaged that the new data would form the basis for construction of bond indices.
The company Nordic Bond Pricing AS has been formally established as a 50/50 joint venture by VFF and Norsk Tillitsmann. Its board chairman will be Jan Pollestad, who has some 25 years’ experience in the Norwegian fixed income market.