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The bank, DNB, like its home country, has experienced a rush of money from American investors looking for safety while they wait out the debt crisis in Europe and slowing economic growth in America and China. Just about every day, the front desk receptionist at DNB takes cold calls from investors wanting to buy Norway’s bonds or some other asset tied to Scandinavia’s healthy economy.
“A few years ago, these people wouldn’t have known where Norway was on the world map,” said Clifford Queen, a DNB bond trader in New York.
Government bonds issued by the United States, Germany and Japan are still the primary havens for scared investors around the globe. The demand has pushed down the interest rate on the 10-year United States Treasury bond to record lows around 1.5 percent. But investors have begun to worry about holding too many Treasury bonds as other safe alternatives dwindle as a result of the economic troubles sweeping the globe. This has led many investors to places that used to be on the fringes of the investing world like Norway, Sweden, Canada and Australia.
These countries offer little of the risk, or the outsize returns, that were so alluring to investors before the financial crisis. But now that fear is the main motivator — strategists call it seeking a return of equity instead of a return on equity — healthy government finances are a powerful magnet for money.
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