Scandinavian bonds to outperform German ones – SEB

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Mattias Bruér, economist and expert on the US at SEB, has issued a note suggesting that the Nordic bank expects Scandinavian bonds to outperform German ones by the third quarter of this year.

A key explanation of these expectations lie in relative currency movements, given that the region has remained outside the eurozone.

“We expect Swedish and Norwegian bonds to post attractive absolute returns from a real money investor perspective, which are exceeding that of their German counterparts,” he wrote in a note.

“Given the hedging cost and our FX forecasts, euro based investors should maintain SEK and NOK exposures unhedged for a positive FX return contribution, while the DKK exposure should be hedged. On the contrary, dollar based investors should hedge the FX exposure of all Scandinavian bond holdings as we expect Scandi currencies to weaken against the dollar.”

 

 

 

 

ABOUT THE AUTHOR
Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 16 years he has been based in London writing about funds and investments . From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope.

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