Sweden's Borrowing Needs Rise, Debt Office Increases Bond Targets

Sweden's National Debt Office Raises Bond Issuance Targets for 2026, 2027

Sweden's National Debt Office (NDO) announced in its semi-annual borrowing review that budget deficits will be higher in 2026 and 2027, necessitating increased central government borrowing.

The NDO will slightly raise the annual issuance volume of nominal government bonds and will hold more frequent auctions. The issuance volume of inflation-linked bonds remains unchanged.

Deficit Forecasts and Reasons

The NDO's new budget balance forecast indicates a deficit of SEK 196 billion ($21.09 billion) for 2026 and SEK 208 billion for 2027, up from previous forecasts of SEK 173 billion and SEK 194 billion respectively in November.

Director General Karolina Ekholm attributed the rapidly growing deficit to increased defense spending, tax cuts, and new fiscal policy measures to mitigate the impact of the Middle East conflict on Sweden's economy.

Bond Issuance Targets and Auction Frequency

The NDO raised its nominal government bond issuance target for 2026 to SEK 220 billion from SEK 216 billion, and for 2027 to SEK 240 billion from SEK 220 billion. Starting June 17, bond auctions will be held every Wednesday instead of every other Wednesday, with the issue volume per auction reduced to SEK 5 billion from SEK 8 billion.