Denmark cuts $1bn off funding need as outlook improves

Bloomberg

Denmark’s center-right government raised its forecast for economic growth this year and predicted it will borrow less via bond markets as the public deficit shrinks.
The minority coalition of Prime Minister Lars Lokke Rasmussen expects gross domestic product to expand 1.7 percent this year, faster than the 1.5 percent it forecast just last month, according to Economy Ministry documents seen by Bloomberg. The official figures are due to be published on Tuesday. The government also expects the deficit to shrink to 1.5 percent of GDP this year, versus the 1.9 percent shortfall previously seen.
In a separate statement, the Finance Ministry said Denmark expects to rely on debt-market financing for a total of 100 billion kroner ($15 billion) this year, which is 7 billion kroner less than previously estimated. Of that, 93 billion kroner will target the krone debt markets, with the rest set to be issued in foreign currencies, it said.
According to Nordea, the expectation remains that Denmark’s state bond issuance will “probably be unchanged,” Jan Storup Nielsen, a senior analyst at the bank in Copenhagen, said in a note to clients. That implies a bond issuance target for 2017 of 65 billion kroner, while the goal for sales of bills will probably be reduced to 27 billion kroner from 30 billion kroner, by the end of the year, Nielsen said.
In its latest forecasts published earlier this month, the European Commission estimated that Denmark’s economy will grow 1.7 percent this year and 1.8 percent in 2018, slightly less than the 1.9 percent average for the European Union seen in both years. Sweden will be the Nordic region’s fastest-growing economy, with the commission predicting 2.6 percent expansion this year and 2.2 percent in 2018.
According to the Economy Ministry documents seen by Bloomberg,
Denmark’s public deficit will narrow to 0.7 percent of GDP in 2018, compared with an April forecast for a 0.9 percent gap.