The central government may raise short-term foreign loans via two Commercial Paper programmes, one European (ECP programme) and one US programme (USCP programme). They may be used both as part of the central government's liquidity reserve and to facilitate a build-up of the foreign exchange reserve. Unlike T-bills, commercial papers, CPs, are non-standard products with a very high degree of flexibility. The issues can, for example, be adjusted in terms of settlement date, maturity (up to 12 months) and currency. The central government can issue up to USD 12 billion in each of the two programmes. Under the USCP programme, all issuances are in dollars, while it is possible to issue in a number of currencies, including dollars and euro, under the ECP programme. CPs are issued as zero-coupon securities directly to an investor through the central government's counterparties in the programmes. The market for CPs is typically very deep. The CP programmes therefore provide the central government with a quick and flexible access to liquidity.
Market makers in the government's CP programmes
|ECP programme||USCP programme|
|Bank of America Merrill Lynch International||Bank of America Merrill Lynch International |
|Barclays Bank Ireland PLC||Barclays Capital Inc.|
|Barclays Bank PLC||Citigroup Markets Inc.|
|Citigroup Global Markets Europe AG||Goldman Sachs & Co.|
|Citigroup Global Markets Limited||J.P. Morgan Securities|
|Credit Suisse AG|
|ING Bank N.V|
Government bonds in foreign currency (EMTN programme)
The central government primarily issues bonds denominated in foreign currency in order to maintain the foreign exchange reserve, but it can also raise foreign loans to finance the domestic borrowing requirements. When the central government borrows in foreign currency, the loan proceeds are placed in the foreign exchange reserve, and the balance on the central government's account increases by the equivalent amount in kroner. Under the EMTN programme, the central government can issue relatively quickly in currencies where the debt market is very deep, while reaching a diversified investor base both in terms of region and investor type.