Norway Sovereign Wealth Fund Purges All Insolvent Eurozone Debt Holdings, US Hedge Funds Buying

Tyler Durden's picture


Over the years, our friends at the Norway Sovereign Wealth Fund have gone from jeered to cheered. To wit from March 30: "Remember this from September 2010? "Norway, which has amassed the world’s second-biggest sovereign wealth fund, says Greece won’t default on its debts. “The point is, do you expect these guys to default?” said Harvinder Sian, senior fixed-income strategist at Royal Bank of Scotland Group Plc, in an interview. “Norway has taken the view that they will not. The Greek holdings are particularly interesting because the consensus in the market is that they will at some point restructure or default.” Norway says its long-term perspective will protect it from losses. “One could say we are investing for infinity."... Uhm, Big Oops. Needless to say, this stupidity was roundly mocked by Zero Hedge at the time. Yet we can only applaud the fact that unlike other European investors (read primarily Italian banks) which are merely sinking ever deeper into the quicksand by dodecatupling down on pyramid scheme assets, the Norwegian SWF finally "plans to sharply reduce its European exposure while raising investments in emerging markets and Asia-Pacific, the finance ministry said on Friday." While we ridiculed their stupidity in 2010, we applaud Norway's prudence in this case, as unlike other insolvent European entities, the crude-rich country is not falling for the latest round of central planning bullshit, and is finally acting as a fiduciary agent. "We're reducing our European exposure because we see that economic development in the global economy is changing and this should also be reflected in our investment strategy," Johnsen said. "Most likely we'll have to sell some assets in Europe." Remember: in game theory he who defects first, defects best. We expect to see many more funds openly declaring they will commence dumping European assets, all of which are buoyed 100% artificially by the ECB, and US taxpayers, shortly."

One month later the purge is over: "Norway’s sovereign wealth fund sold all its Irish and Portuguese government bonds after rejecting the Greek debt swap and warned that Europe faces considerable challenges." Wait, what's that? The Eurozone's political strongarming (think Steve Rattner and GM) was unable to force the world's most powerful sovereign wealth fund into agreeing to what was essentially extortion when bank after bank noted how delighted they are to be bent over and take an 80% writedown on their Greek holdings. Stunning. But at least we now know who will be suing Greece shortly in an attempt to recoup par value of their strong law bonds: grab the popcorn - Norway vs Greece will be quite a spectacle. As for their dump of Irish and Portuguese bonds, no surprise there: fool me once (in perpetuity) shame on me, fool me twice, shame on Dan Loeb... who was buying everything Norway was selling. We wonder who ends up right.


The $610 billion Government Pension Fund Global returned 7.1 percent, or 234 billion kroner ($41 billion), as measured by a basket of currencies, in the first quarter, the Oslo-based investor said today. Its equity holdings gained 11 percent while its fixed-income investments rose 1.6 percent.


The fund, which voted against Greece’s debt swap this year because it disagreed with being subordinated to the European Central Bank, also said it reduced debt holdings in Italy and Spain amid a broader strategy to cut investments in Europe. The fund added government bonds from emerging markets such as Brazil, Mexico and India.


“Predictability is important for a long-term investor and the euro-area faces considerable structural and monetary challenges,” Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, said in a statement.


Stocks jumped globally in the quarter after the European Central Bank stepped in with more than $1 trillion in three-year loans to the region’s banks. The rally was tempered toward the end after Spain announced in March it would miss a deficit target and as austerity measures dragged euro-region economies into a recession and boosted unemployment to a 15-year high.

Wait, so precisely the two things we noted in our Subordination 101 post: namely priming subordination nd lack of visibility in a world in which any investor can be crammed down at any moment, are being amplified by the world's biggest sov wealth fund? Good to know. Sadly, to everyone else who has been buying worthless bonds in an ECB-subsidized, furious and futile attempt to dodecatuple down on the worst of the worst in European paper we have one message: enjoy your transitory gains why you can. With SPIs coming to all the other PIIS countries shortly, those who bought first (in 2012) will promptly be last.

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Fri, 05/04/2012 - 12:17 | 2397210 GeneMarchbanks
GeneMarchbanks's picture

'Nanke Put is Almighty. Either that or they want to short to smoldering oblivion.

Fri, 05/04/2012 - 12:21 | 2397228 Aziz
Aziz's picture

Hedge funds loading up on lawyers ready to challenge Greece in the European Court of Human Rights.

I predict they'll get steamrollered, possibly even on the UK jurisdiction debt that is trading at a premium. 

Welcome to subordination.

Fri, 05/04/2012 - 12:25 | 2397232 idea_hamster
idea_hamster's picture

What happened to "investing for infinity"?!

What a bunch of weak-ass milquetoasts those chumps turned out to be!

Fri, 05/04/2012 - 12:58 | 2397267 hedgeless_horseman
hedgeless_horseman's picture



All that oil (5th largest oil exporter).

A monarchy run by a king.

All the women look like this...

But the biggest reason to invade Norway?  Selling sovereign debt.  What if every oil exporter starts doing this?

Rape and pillage it is, Nobel Peace Prize be damned.


Fri, 05/04/2012 - 19:37 | 2398556 fiddy pence haf...
fiddy pence haff pound's picture


no respect for cultural icons.

Mon, 05/07/2012 - 16:42 | 2404664 Cathartes Aura
Cathartes Aura's picture

taking up the torch from Leo & RoboTrader, hmm.

are those your daughters, or someone elses?

Fri, 05/04/2012 - 12:34 | 2397270 Ahmeexnal
Ahmeexnal's picture

Breivik's templar buddies about to strike?


Fri, 05/04/2012 - 12:47 | 2397317 BandGap
BandGap's picture

Pensions as a Human Rights issue? Retirement in comfort if you plan accordingly is a Human Right? Show me the MONEY!

Fri, 05/04/2012 - 13:59 | 2397585 Jonas Parker
Jonas Parker's picture

Send lawyers, guns, and money,

and get me out of this!

Send lawyers, guns, and money,

The shit has hit the fan!


Fri, 05/04/2012 - 21:03 | 2398707 Buck Johnson
Buck Johnson's picture

I know, this is going to get crazy.  Everyone knows that all of this debt is bad debt, they are just make believing it's good thats all.

Fri, 05/04/2012 - 12:23 | 2397231 idea_hamster
idea_hamster's picture


Fri, 05/04/2012 - 12:28 | 2397249 Not Too Important
Not Too Important's picture

"Smoldering oblivion". That is precisely Norway's investment strategy.

Fukushima, through the spread of aerosolized uranium and plutonium, has condemned the planet, and the human race, to "smoldering oblivion". Japan and the Pacific West Coast in 5-10 years, the Northern Hemisphere in 20 years, the entirety of the planet in 40 years.

They are selling off their investments in higher cancer rate countries, and investing in slower growth cancer rate countries. There's nothing secretive going on here. They are simply following prudent investment strategies, based on the projections of the spread of lethal radionuclides by the world's militaries.

Regardless of the'Nanke Put, the world's economies and investment stratagies will be following the spread of the lethal radionuclides. Hedge accordingly.

Fri, 05/04/2012 - 12:48 | 2397283 Ahmeexnal
Ahmeexnal's picture

We are all nuclear savages:

Fri, 05/04/2012 - 17:11 | 2398298 Matt
Matt's picture

That is horrible.

"If you won't come to where the nukes are, we'll bring one to you!"

Civilisation -

Fri, 05/04/2012 - 12:38 | 2397284 GeneMarchbanks
GeneMarchbanks's picture

In fairness, cesium is totally being ignored by the 'market' despite clearly being in a bull.

Fri, 05/04/2012 - 14:32 | 2397656 CPL
CPL's picture

They'll never get to spend the money they've robbed and their children won't live to inherit it.


It's one of the main reasons I'm in the fuck it boat now, I thought there might have been a way out fo the situation, but a nuclear accident that hasn't been taken care of is going to cost more than a couple of stocks.

Fri, 05/04/2012 - 16:31 | 2398155 Whiner
Whiner's picture

AFLAC is selling bookoo policies. Go long AFL. Go short in 2014 when claims arrive.

Fri, 05/04/2012 - 12:18 | 2397213 evolutionx
evolutionx's picture

Situation is becoming worse:


ECB Fear Indicator near record level

Banks deposited 805 billion with the ECB

Fri, 05/04/2012 - 12:24 | 2397223 SheepDog-One
SheepDog-One's picture

LOL soak up that insolvent lower than junk GARBAGE no one else wants U.S. widows and orphans funds!!

Everyone out there sopping up crap debt hand over fist again like 2008 never even happened!

Fri, 05/04/2012 - 12:23 | 2397234 gckings19
gckings19's picture

they did what prudent money managers should do...sell the stuff they think is not worth holding.....don't buy preotection, or hedge or some other bs....sell the crap and buy good assets. 

Fri, 05/04/2012 - 12:26 | 2397238 EscapeKey
EscapeKey's picture

The only buyers at this stage are central banks (and connected TBTF's who trade when news are leaked to them before release).

Fri, 05/04/2012 - 12:28 | 2397246 ebworthen
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Norway knows that the FED won't socialize their losses the way they will with U.S. institutions.

What's another way for the FED to directly fund European debt and prop up the ECB?  Bail out U.S. funds that buy the crap and go belly up.

AIG and Countrywide part deux.

Sat, 05/05/2012 - 11:34 | 2399303 Marco
Marco's picture

Which of course makes perfect sense ... the Fed shares the profits from the petro-dollar with the EU to let the status quo survive and they spend Saudi Arabian oil doing it.

The average American is in debt, they have nothing of worth to save anyone with except their unique ability to take on more debt (nearly) without limit.

If the Euro collapses the dollar is next ...

Fri, 05/04/2012 - 12:28 | 2397248 navy62802
navy62802's picture

Ha ... dodecatupling. Smooth.

Fri, 05/04/2012 - 12:29 | 2397253 El Viejo
El Viejo's picture

Didn't Corzine try something similar??

Fri, 05/04/2012 - 12:45 | 2397272 Dr. Engali
Dr. Engali's picture

Corzine ? Who is this Corzine you speak of? Surely if somebody stole 1.6 billion dollars we would see them prosecuted to the fullest extent of the law...... assuming of course we had laws.

Fri, 05/04/2012 - 12:45 | 2397315 Dr. Engali
Dr. Engali's picture

Must be a Corzine supporter around here.

Fri, 05/04/2012 - 12:39 | 2397289 ebworthen
ebworthen's picture

Corzine and his cronies planned the failure; a way to give Jamie Dimon another $1.2 billion, prop Greece and the ECB, and defraud more of the "little people" (farmers and little old ladies).

Gives you that warm fuzzy feeling, eh?  Don't forget to fly the flag on July 4th.

Fri, 05/04/2012 - 12:43 | 2397311 Dr. Engali
Dr. Engali's picture

The Feds won't do a thing about 1 man stealing a billion six of private money, but they will jump all over 100 people accused of 500 million in Medicare fraud of public money.

Fri, 05/04/2012 - 12:57 | 2397361 El Viejo
El Viejo's picture

Or Martha Stewart

Mon, 05/07/2012 - 11:22 | 2403438 goldfish1
goldfish1's picture

Ain't flying the flag til cheney kicks the bucket and maybe not then either.

Mon, 05/07/2012 - 16:47 | 2404680 Cathartes Aura
Cathartes Aura's picture

as long as the organ harvest holds out, Cheney will be around to observe the outcome of his years of service. . .

after all, he was raised during the Bionic Man era, heh.

Fri, 05/04/2012 - 12:41 | 2397278 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture



"Dodecatuple Dutch Rudder involves twelve participants standing in a circle. Each participant holds his member with his right hand, and the man to his lefts right elbow with his left hand. By this means each person can move his neighbour's right arm up and down, essentially masturbating him, but without the gayness of touching another man's penis".

I tried a search for the closest meaning for "dodecatuple", this is best I could find that fits the story.

Mon, 05/07/2012 - 16:49 | 2404691 Cathartes Aura
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*gives thanks that you don't have picture posting rights*

Fri, 05/04/2012 - 12:37 | 2397281 cnhedge
cnhedge's picture

A gradual deterioration in the collateral backing multi-cedulas

Fri, 05/04/2012 - 12:38 | 2397285 orangegeek
orangegeek's picture

Unloading Euros appears to support the bullish case for the USD.


Elliott wave primary count shows bullish USD.

Fri, 05/04/2012 - 12:38 | 2397290 phyregold
phyregold's picture

I think we just seen Operation Hedging the new form of a bailout

Fri, 05/04/2012 - 12:42 | 2397301 steve from virginia
steve from virginia's picture


Norway v. Greece, gimme a break! Norway broke Greece along with the other oil producers. Now it wants ... what exactly?

Norway got starched on a bit o' vender financing gone wrong. Let's see them do it again.

Buying Norwegian crude from here on in is going to take cash, not euros either. Dollars ... then gold ... then nothing at all. Maybe in a thousand years someone might think of something do do with 'black gold' other than burn it up for nothing (on credit fer Christ's sake).

Fri, 05/04/2012 - 16:29 | 2398137 boiltherich
boiltherich's picture

Norway is not an EU member state, they are not part of the eurozone, they use the krona, and Brent is priced in dollars.

Sat, 05/05/2012 - 11:38 | 2399312 Marco
Marco's picture

Dollars the oil producing countries used to buy Euro denominated debt ... making the use of the dollar as an intermediary almost irrelevant.

Fri, 05/04/2012 - 12:42 | 2397304 Snakeeyes
Snakeeyes's picture

Europe is on code red. Why are we buying their crap? With 51%+ teen unemployment, they are NEVER going to get out of this mess.

Fri, 05/04/2012 - 12:48 | 2397320 GeneMarchbanks
GeneMarchbanks's picture

Europe is on code red. Why are we buying their crap?

Are you really that dumb?

Fri, 05/04/2012 - 13:08 | 2397402 mjk0259
mjk0259's picture

US has 50% unemployment/underemployment (McD) amongst recent college graduates.


Fri, 05/04/2012 - 12:43 | 2397310 Negro Primero
Negro Primero's picture


"The fund’s investments in euro-denominated Greek government bonds were in March exchanged for new bonds issued by the Greek government and the European Financial Stability Facility (EFSF) as part of a restructuring of Greece’s debt. (???)

The fund sold its holdings of Portuguese and Irish government bonds in the quarter and reduced its investments in government debt from countries including Italy and Spain. It also bought government bonds issued in local currency in emerging markets such as Brazil, Mexico and India."

Fri, 05/04/2012 - 13:03 | 2397384 Seditious Blasphemer
Seditious Blasphemer's picture

Hammer time

Fri, 05/04/2012 - 13:08 | 2397400 PORTUGALIA
PORTUGALIA's picture

Norway is a USA colony...maybe they will invest in USA BONDS (16 trillion in debt ONLY)...or hummm let me think asian bonds...what about indonesian, vietnam or thai bonds?....this vikings are dumb as a rock.

Fri, 05/04/2012 - 13:24 | 2397449 ivars
ivars's picture

I think that todays jobs report sets a nice foundation =firm bottom for silver in USD due to QE, of course. So we already may be in the beginning of the uptrend, good to join.Current  GSR peak is also confirming this. However, as the trouble will now accelerate in Europe, USDx is going to move higher as well. Nothing contradictory in that. Silver will now move up both in USD and EUR, but faster in EUR.

2 updated charts ( actual - in blue, relevant chart in silver-green) that explains what could play out. Press right button, View, zoom to see values/dates.

Silver till September 1st-last month was a good fit as well:

EUR/USD - update with actual (blue) satisfactory:

More charts here:

Simple but accurate piece about Europe-here. I live in Europe.

Fri, 05/04/2012 - 13:25 | 2397454 youngman
youngman's picture

Didn´t Norway buy some 100 year bonds a couple of years back.....I think so...but I am with them...I would be selling too...and buying gold...and silver...and I bet they do...

Sat, 05/05/2012 - 00:42 | 2398938 Ahmeexnal
Ahmeexnal's picture

They don't buy gold.

They gave away their gold to England during WWII.

They no longer publish their gold reserves....because they have none, and admitting the UK kept the gold would be a huge embarrasment considering they sent it there to avoid Germany stealing it.  They should have fought to the death instead of sinking their navy and then hoisting the third reich flag over their land. Now they will be remembered as what they are: Cowards....and reeeeeeeeeeeally stupid.

Mon, 05/07/2012 - 16:52 | 2404702 Cathartes Aura
Cathartes Aura's picture

so, did Gordon sell their gold too?


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