SOVEREIGN BORROWERS ARE SLIMMING
Even the most opportunistic European sovereign borrowers will have smaller funding requirements in 1987. There will always be wild cards: the United Kingdom's two huge FRN issues took $6.5 billion from the capital markets in 1986 as the British government sought to shore up reserves for playing in the forex markets. The Republic of France occasionally is rumoured to be considering a return to the Euromarket. But the regular sovereign borrowers agree that they'll be giving less business to bankers.
Denmark raised over $1 billion in a single day in the Durodollar and Euro-French franc markets in November, but next year a dramatic cut in the kingdom's borrowing requirements is likely.
This year Denmark's gross borrowing in the international markets was around Dkr55 billion ($7.25 billion). Next year, it will be only about Dkr31 billion ($4.1 billion). "A major part of the fall is due to a lower estimate for our balance of payments deficit,' said Niels Erik Sorenson, a director at the Ministry of Finance.
The deficit on current account is expected to fall from Dkr33 billion ($4.3 billion) to Dkr10 billion ($1.3 billion) as Denmark's consumer spending boom tapers off and the full beneficial effects of a net capital outflow from the Danish private sector are realised.