By Adam Ewing and Meera Bhatia
Sweden’s corporate bond market is poised for a surge this year as companies abandon an “extreme”reliance on bank loans amid stricter capital rules, said Mats Carlsson, who heads the investment bank Pareto Ohman AB.
“The banks will be more conservative with their lending, while at the same time there will still be the same demand from companies,” Carlsson, who became chief executive officer at Pareto Ohman in July, said in an interview in Stockholm. “Supply will diminish and demand will grow.”
Sweden’s government wants the country’s lenders to target more rigorous capital standards than those set by the Basel Committee on Banking Supervision and has set a deadline that’s six years earlier than Basel’s 2019 goal. As the cost of bank credit rises, firms are seeking alternatives. With Swedish companies now relying on banks for 80 percent of their debt financing, versus about 30 percent in the U.S., the scope for a surge in corporate issuance is considerable, Carlsson said.
So far this year, Swedish corporates and municipalities have issued 34.8 billion kronor ($4.9 billion), bringing sales to 11 percent of the amount sold in 2011, according to data compiled by Bloomberg. Among the main issuers were Securitas AB, a security and alarm company, which this month sold 400 million kronor in three year notes at 3.45 percent interest. TeliaSonera AB sold 1.1 billion kronor in debt on Jan. 13. The figures only reflect krona-denominated sales.
“We expect more and more companies to come to the market for financing and to try to find other financing sources,”Magnus Nilsson, a Stockholm-based fund manager at Catella Fondforvaltning AB, which manages $1 billion in fixed income assets, said in an interview.
According to Daniel Sachs, the chief executive officer at corporate bond investor Proventus, this year will see a greater demand from Swedish corporates to sell their bonds than there will be a supply of credit.
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