Notes

As a consequence of the exit from SN Power, substantial liquidity became available and was placed in temporary investments: First, loans were extended to three banks with an average interest rate of 1.5% + SOFR and a term of 5 years, with linear repayment after the first year. Second, USD deposits with fixed terms of 1–6 months were placed in banks.

In addition, Allianz has been commissioned to manage USD 500 million. The portfolio consists of highly liquid covered bonds and has a weighted credit rate of AA- and average term of 1.8 years. The portfolio is to be mainly invested in development banks, i.e. within the sector in which we operate ourselves. Up to 40% can be invested in other sectors, however, but the bonds must then meet the requirements of either being green and sustainable or having a social impact. Norges Bank’s Investment Management’s exclusion list is also applied. 41% of the portfolio is invested in euros and 5% in sterling, but hedged against USD by means of 3-month rolling futures contracts. Hedging contracts have been made for EUR 167.25 million and GBP 20.1 million.

The value of the portfolio has fallen in pace with expectations of higher policy rates, and we expect that most of the fall is now reflected in the portfolio. Norfund intends to hold the portfolio until maturity, with the result that the average annual return is estimated at 1.5% for the life of the portfolio.