Exclusive: Finland Debt Head Sammallahti: Expect €43 Billion Issuance in 2025, Structure Similar to 2024
5 November 2024

By Marta Vilar – MADRID (Econostream) – Finland expects its debt issuance programme to amount to ‘around €43 billion’ in 2025, according to Anu Sammallahti, director of finance and acting Head of Division at Finland’s State Treasury.
In an interview with Econostream on Friday (transcript here), Sammallahti said next year’s issuance strategy would be ‘[p]retty much along the same lines as this year, because the size is fairly similar’.
Issuance for 2025 would therefore include three euro benchmark syndications, a ‘benchmark US dollar issuance’ conditioned to market developments, and bond auctions that would also depend on the evolution of the market, according to Sammallahti.
Finland did not take an opportunistic approach to its issuance strategy, but market demand was taken into consideration in the selection of bonds in auctions, she said.
‘[W]e follow a predictable and pre-communicated issuance pattern, like an auction calendar’, she said. ‘In choosing the bonds to be auctioned we, of course, observe market demand, and that might then be affected by the level of rates or curve shape. But it’s an indirect channel.’
‘The exact timing for the syndications of course allows for some evaluation of market conditions, but the overall pattern would be less influenced’, she added.
When asked if the Finnish debt market could face waning demand in 2025 amid falling interest rates, Sammallahti replied that she was ‘not concerned’ about this possibility and that it could in fact lead to more potential for fixed income instruments and sovereign bonds.
As for Finland’s plans for green bond issuance, she echoed her predecessor’s answer in an interview with Econostream in 2022: ‘there are no imminent plans’.
Sammallahti said a change in this approach would depend on the standardisation of the green bond market, secondary market liquidity issues and other aspects related to costs.
‘[A]rguably, setting up a labelled product line and the green framework and the follow-up reporting is of course not cost free. So, it would be nice to see those costs covered by an equivalent reduction in the cost of funding’, she stated.
As for secondary market liquidity, she warned that issuing a labelled product such as a green bond could wind up draining liquidity from the nominal secondary market.
Standardisation of the green bond market, the incompletion of which was voiced as a requirement for Finland to enter this market by her predecessor in our interview in 2022, had still not been achieved, according to Sammallahti.
‘[T]he European green bond standard is not yet complete. There are solutions to work around this while still adhering to the ICMA standards. I don't think you could argue that the standardisation is fully done because it still appears to be work in progress’, she said.
Regarding the Finnish State Treasury’s take on retail investors, Sammallahti said that there was currently no intention to target this sector.
‘Our historical experience with retail issuance, and I admit this is from a long time ago, was that it was not a very significant source of funding at the time’, she said.
The Treasury was not planning on any kind of innovation within its issuance strategy, she said.
Asked about economic developments and the rise of the Finnish debt-to-GDP ratio in recent years, Sammallahti said this upward trend was not expected to continue.
‘The current government certainly thinks it should not and they are implementing austerity measures, both expenditure cuts, tax hikes and structural labour market measures to curb the deficit increase during their term’, she said.
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