Norges Bank Investment Management, the sovereign wealth fund that manages Norway's oil revenue and oversees $2.3 trillion in assets, has proposed a significant pullback from U.S. government debt. The plan, submitted by Governor Ida Wolden Bache and chief executive Nicolai Tangen to Norway's finance ministry, calls for selling roughly $80 billion worth of Treasury bonds.
Under the proposal, the fund's benchmark allocation to U.S. Treasuries would drop from 34.1% to 21.9%, a decline of more than 12 percentage points. That money would instead flow into higher yielding, non government U.S. debt, including mortgage backed securities tied to Fannie Mae, Freddie Mac and Ginnie Mae, an allocation set to rise by about 11 percentage points.
The shift is part of a broader rebalancing of the fund's bond portfolio. Government bonds overall would fall from about 70% to 50% of its fixed income benchmark. Eurozone government debt would edge down to 14.1% from 16.8%, while Japanese government bonds would climb to 7.4% from 4.6%. Total exposure to the U.S. dollar would hold roughly steady at 52.5%, since the money is moving into other dollar denominated assets rather than leaving the currency altogether.
The fund has described the changes as a step toward aligning its holdings more closely with broader market indices and gaining access to a wider range of risk premiums, rather than a statement on U.S. creditworthiness.
Even so, the proposal lands at a moment of heightened scrutiny of U.S. government finances. Washington's national debt has climbed past $40 trillion, the federal deficit is projected at close to $2 trillion, and trade disputes along with friction over NATO commitments have added to questions among major global investors about the long term appeal of holding large piles of U.S. government debt.