Sweden has received praise around the world for their efforts in managing the COVID-19 saga, without bludgeoning their citizenry with ridiculous controls and draconian lockdowns.
Epidemiologists, economists, medical professionals and large swathes of the reasonably minded general public have hailed Sweden’s approach as one of intelligence, logic and measure.
For those unaware, Sweden successfully walked through the COVID-19 ‘pandemic’ without any of the heavy-handed and out-of-control measures imposed by many others countries and states around the world. They were a beacon of logic and cool-headedness, and the scientific data has proven them to be correct.
Alas, the same can’t be said, it seems, for the Swedish national bank, the Riksbank. Amongst all of their recent successes in protecting the liberties of their citizens, a very odd occurrence took place within financial circles last week. It has, at the very least, raised eyebrows.
Earlier this year, Sweden’s credit market cheered as the world’s oldest central bank brought in consultants from BlackRock to help it move ahead with a controversial corporate bond purchase program.
Now, the cheering has turned to disbelief as it becomes clear Sweden’s Riksbank won’t share any of the findings BlackRock made with the very market the program is intended to help.
Corporate bonds, in all developed markets, are a long-standing bell-weather for general economic performance. Free-markets are generally good at accurately pricing the risk of a company’s operations, and subsequently price their debt accordingly.
With global Central Bank benchmarks hitting multi-1000 year lows, and many of the nordic countries leading the way into finance twighlight zone of negative interest rates, the yields available in corporate bonds provide a home for yield-hungry investors.
We will for now ignore the influence of central bankers and their MMT activities, and the impact this has in artificially compressing true price-discovery for risk assets, and we will regard the corporate bond market as a reasonably ‘un-bastardised’ asset class.
For the sake of this article, we will also ignore the fact that in the US, the Federal Reserve is actually buying corporate debt as a way to support US companies during the COVID-saga. Incredibly, this is true, and seemingly an acceptable intervention by, effectively, the US government.
As of March 2020, the Fed released a list of almost 800 companies that it would directly support via the purchase of their investment-grade debt, via the secondary market. You can view the full list here.
Sweden hasn’t yet (admitted to) done the same, but the fact that the Riksbank would seek to conceal the findings of the very group employed to investigate and report upon the Swedish Bond market, suggests that something is clearly amiss.
Chart of the Day
Swedish Finance Minister Calls High Debt Levels a `Huge Problem’