FRANKFURT (Reuters) - Norway’s $610 billion oil fund will cut its exposure to euro zone sovereign debt to below 39 percent of its overall bond holdings, in part because it feels it was discriminated against in Greece’s debt swap, the fund’s head told a German newspaper.
Previously, the fund’s holdings of euro zone sovereign debt were at almost 50 percent, Yngve Slyngstad, the Chief Executive of Norges Bank investment management, which administers the Statens pensjonsfond, told Frankfurter Allgemeine Zeitung.
The Greek debt swap had shown that eurozone governments and the European Central Bank had cut a deal whereby they discriminated against private investors, Slyngstad told the paper.
“It is very problematic that institutional investors from the euro zone got preferential treatment when compared to private investors,” Slyngstad told the paper.
Slyngstad declined to quantify the extent of the fund’s sell-off of European assets but signalled it would continue.
“So far we have reduced the proportion of euro zone sovereign debt holdings to 39 percent from almost 50 percent of overall bond holdings, and we are further reducing,” Slyngstad said, adding the fund had also cut the proportion of euro-denominated bank bonds almost in half.
The fund is Europe’s biggest equity investor. The value of the fund stood at 3.496 trillion Norwegian crowns ($609.14 billion) on March 31, up from 3.312 trillion at the end of December.
The fund is following up on instructions to rebalance its portfolio issued by the Norwegian finance ministry in March.
At the time, the Norwegian finance ministry said the proportion of its European investments in equity, fixed income and real estate will be reduced to 41 percent from 54 percent “gradually, over time”, while the Asia-Pacific share will rise to 19 percent from 11 percent.
“European institutions have not asked us about the circumstances for further investment in sovereign debt from the euro zone. But the question about what private investors expect is relevant for Europe,” Slyngstad told the paper.
The fund took part in the Greek government bond exchange as part of Athens’ rescue even though it voted against the bond restructuring - the largest in history - because it opposed the special treatment given to the ECB and wanted bondholders to be treated equally.
Reporting By Edward Taylor; additional reporting Balazs Koranyi; editing by Jason Neely