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Finland: modest size starts to pay off

Sovereign borrowers

Finland scouts out the international market

Bankers praise the way Finland has reacted to what initially seemed the problem of a declining domestic investor base in the wake of entry to the eurozone - it became more responsive to international demand.

As bigger sovereigns face more concern over their public finances, some smaller countries such as Finland have found that the rules have changed dramatically. The relative importance of credit has increased and investors are no longer quite so fixated on the liquidity of very big issues. Finland's economy is strong, and the old assumption that issuers of this kind would always trade at a premium over European sovereign benchmarks looks increasingly unreliable.

Brown at Citibank says: "Finland had a tremendous 2002 - they suffered in 2001 as their domestic investor base diversified out of Finnish government bonds, and entered last year trading at levels apparently unrelated to their economic fundamentals. Over the course of 2002 they achieved an impressive leap in the internationalization of their investor base through the further use of syndication." One particularly impressive deal was the $1.5

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