July 10, 2019 / 10:26 AM / 2 months ago

Norway wealth fund backs ECB plan for pan-European debt securities platform

OSLO, July 10 (Reuters) - Norway’s $1 trillion wealth fund, the world’s largest, has become the first major investor to publicly back a proposal by the European Central Bank to create a harmonised European issuance platform for debt securities.

A consultation by the ECB among bond issuers, investors and dealers seeking feedback on its proposal for a pan-European issuance mechanism closed on Tuesday.

The Norwegian sovereign wealth fund, one of the world’s largest investors, pools the revenues of Norway’s oil and gas production and invests them in stocks, bonds and real estate abroad.

It is managed by a unit of the central bank called Norges Bank Investment Management (NBIM).

“NBIM believes that the proposed new service by the ECB, which aims to provide a single centralised neutral pan-European process for debt securities issuance, will help to enhance the current ecosystem,” the fund said in a letter to the ECB dated Tuesday and published on the fund’s website on Wednesday.

The fund is a major trader of bonds, which accounted for some 28% of its value at the end of the first quarter, including some 67 billion euros in fixed-income assets denominated in the single currency, said the letter.

Currently the issuance of debt securities is decentralised and can lead to inefficiencies, the fund said.

“The high-level principles of the proposed framework suggest that it has the potential to improve the functioning of the EU debt securities market... and benefit both issuers and investors,” it said.

The ECB said at the launch of its consultation, which began on May 28, that such a system may avoid multiple channels and procedures to issue and distribute debt securities, as is the case now.

In addition, it said, the current system does not cover the European Union and its investors as a single market. (Reporting by Gwladys Fouche; Editing by Jan Harvey)

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