Funding

In its funding, the Finnish central government follows a benchmark strategy, placing the main emphasis on euro-denominated benchmark bonds. The State Treasury keeps the benchmark bond curve as liquid as possible with regard to maturities of 2–15 years. The benchmark bonds currently represent more than 80 per cent of the whole central government debt. The present situation was achieved with seven benchmark bonds, the size of each being EUR 5–7 billion.

Currently, the State Treasury issues every year one or several new benchmark bonds which immediately on issue reaches the required size for a benchmark bond. In consecutive years the State Treasury issues a 5-year benchmark bond and an 11-year benchmark bond. The initial bond issues are implemented by the State Treasury by using the so-called syndicated system. In this way, the optimal structure of the new loan investor base is ensured, and balanced behaviour of the bond in the secondary markets is safeguarded. Sizes of existing benchmark bonds may later be increased by auctions organized by the State Treasury. Thus, the outstanding amount of these bonds may be increased from the original size.

In addition to benchmark bonds, the central government may issue long-term debt instruments also in currencies other than the euro. The State Treasury maintains its European Medium Term Note -programme which permits the issue of bonds in a number of different currencies. The EMTN funding only works as a supplementary method to the benchmark bond strategy.

The State Treasury additionally offers domestic euro-denominated retail bonds. Yield bonds are usually issued 2-4 times a year. In all, the outstanding stock of retail bond instruments products directed at retail investors is less than one per cent of the central government debt.

Treasury bills provide the central government with a flexible short-term financing channel. The maximum maturity of T-bills is one year. The State Treasury issues T-bills denominated in both euros and occasionally US dollars. The State Treasury swaps all dollar-denominated funding into euros at the point of issue, so these operations do not involve exchange rate risk for the central government. The State Treasury issues T-bills on a daily basis throughout the year, depending on the investor demand and central government funding requirements.