More than 60% of European institutional investors would buy sovereign bonds issued by Norway and Sweden, making them the most popular government bonds in a survey.
Commissioned by alternative investment firm Aquila Capital, the survey also found scepticism that government bonds can perform. Nearly half the 255 European institutional investors said they believed sovereign issues would deliver negative returns and a fifth said they would reduce their allocation to government bonds in the next five years.
The Nordic countries have long been seen as a safe haven in Europe, though they are hardly cheap. The yield on ten-year Norwegian government debt stands at about 2% while Swedish ten-year government debt has a yield of about 1.4%.
German ten-year sovereign bonds, which were the third most popular in the survey, also have a yield of about 1.4%.
The results may be due to concerns over the future of the eurozone – Norway and Sweden are outside the eurozone and maintain control of their currencies – something that appeals to investors worried about the future of the single currency.
More than half the institutional investors, 54%, said they did not believe the euro will exist in its current form in 2015, though the degree of scepticism varied hugely between countries. Only 8% of UK institutional investors said they expected the euro to survive to 2015 in its current form, compared with 72% of Italian and 60% of French investors.
The sceptics mainly believed the single currency would continue to exist but with some countries leaving the union, though a small minority expected the euro to disappear.
The least popular bonds in the survey were those issued by Greece, Portugal and Spain. A little under 40% of the investors said they would invest in bonds issued by the United States or UK.