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Danish report Danish report
by Euro Reporter
2012-09-08 07:39:02
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Denmark gets bids for more than twice amount sold of 2023 bond

Denmark received bids for more than twice the amount offered in the country’s new 10-year bond as the debt office prepares to replace its existing benchmark note in that maturity. The debt office in Copenhagen sold 5.03 billion kroner ($851 million) in its November 2023 note, which offers a 1.5 percent coupon. The yield at the auction, which attracted bids for 10.44 billion kroner, was 1.46 percent, the central bank said.

Denmark will probably have issued 20 billion kroner in the new bond by November, allowing the 2023 note to replace the existing 10-year bond as the nation’s benchmark in that maturity in about two months, according to Danske Bank A/S (DANSKE), Denmark’s biggest lender and a primary dealer. “They ought not to have any problems reaching 20 billion kroner by November,” Jens Peter Soerensen, Danske Bank chief bond analyst in Copenhagen, said by phone yesterday. “They have a luxury problem, as demand is still very strong.”

Denmark pays less than Germany to borrow over 10 years and has charged investors to hold its two-year debt through most of July and August. The government, which boasts a debt ratio that’s less than half the euro-zone average, estimates its borrowing need will slump 29 percent next year as the budget deficit narrows to 1.9 percent of gross domestic product.




Denmark u-turns on fat tax

Only one year after its implementation, the Danish government is planning to scrap the “fat tax”. The reason why: reports show that it simply doesn't work. Denmark is now likely to abolish the tax levied on saturated fats, as empirical evidence shows that its negative effects outweigh the benefits for the Danish Treasury. In particular, reports point to job losses in the food processing industry and Danes crossing the German border to buy cheaper products.

The proposals to scrap the fat tax have been included in the 2013 draft budget, which is currently under consideration by Parliament. Under current law, Denmark is applying a tax of DKK16 (USD2.40) per kg of saturated fat on food items. This tax was introduced back in autumn 2011 to combat obesity and raise tax revenues.

Health organizations have criticized both the tax and its scrapping, arguing that it was not ambitious enough. They say that taxing junk food more while subsidizing healthy products would have been a better way to tackle the problem.



Denmark to provide free education to students from developing countries

The development minister, Christian Friis Bach (Radikale), and the education minister, Morten Østergaard (Radikale) want to provide scholarships for young people from developing countries in Asia and Africa so that they can receive a university education in Denmark. Bach said that he hopes to offer the assistance to at least 50 young people as early as next summer, with an eye towards expansion. “There are many students in poor countries who do not get the education they dream about,” Bach said. “We can offer them the opportunity to come here and then return home and participate in improving their society.”

Bach said that there would be a particular focus on providing education in the fields of agriculture, water and energy. “Those are areas we are good at in Denmark, and the poor countries need to create solutions in those areas,” he said. Bach said that the scholarships would represent only a small amount of the Foreign Ministry’s expenditures and that the plan would be financed through the government’s recently-released budget.

Bach’s proposal was greeted with scepticism by Mai Henriksen, the research spokesperson for the Konservative party, who doubted that it would make much difference since the best and brightest from developing countries already have university degrees. Dansk Folkeparti’s research spokesman Jens Henrik Thulesen Dahl said that the focus should be on educating Danes. “The government’s stated objective is that as many young Danes as possible receive an education, and we have just discovered that there are many challenges to ensuring the quality level at our nation’s universities,” Dahl said.


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