Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund, has formally proposed a significant reduction in its exposure to U.S. Treasury bonds. In a letter to the Norwegian Ministry of Finance dated September 4, Norges Bank Investment Management (NBIM) recommended cutting the fund’s allocation to U.S. government debt from 34.1% to 21.9% of its fixed-income portfolio.
The move represents a potential sell-off of approximately $80 billion in U.S. debt. NBIM, which manages roughly $2.34 trillion in total assets, intends to adjust its broader fixed-income strategy, proposing that government bonds be reduced from 70% to 50% of the total fixed-income portfolio. The fund currently holds about $215 billion in U.S. Treasuries.
The proposal follows a period of heightened international concern regarding U.S. fiscal sustainability. In August, total U.S. federal government debt crossed the $40 trillion mark, a figure that exceeds the nation’s total GDP from the previous year. While the U.S. Treasury has initiated long-term bond repurchases to stabilize market yields, analysts argue these measures do not resolve fundamental deficit issues.
“The new debt is being added to the already existing debt,” said Fabian Lindner, professor of international economics at the Berlin University of Applied Sciences for Engineering and Economics. “At the same time, there are no signs that the U.S. government is planning to cut its fiscal deficit. At some point, the situation will become unsustainable.”
Norway’s move aligns with a broader trend among global investors. According to recent U.S. Treasury data, Japan and the United Kingdom also reduced their holdings in June, selling $26.4 billion and $8.7 billion respectively. Other institutional investors, such as the Netherlands’ ABP pension fund, have also taken steps to trim their U.S. bond exposure earlier this year.