Swedish government initiatives support disrupted credit markets

Nordic Credit Rating (NCR) believes the refinancing risk of Swedish companies has been put in the spotlight as a key driver of corporate default risk following a dysfunctional credit market where issuance activity is limited. Some of this refinancing risk has been reduced following recent government initiatives targeted at the export sector.

Reduced capital requirements for banks, moving the credit risk of corporate exposures from banks to the government's balance sheet through a reopened guarantee facility from the Swedish Export Credits Guarantee Board (EKN), along with an increased and widened liquidity facility for a similarly named government-owned lender, the Swedish Export Credit Corporation (SEK), is likely to support the credit market, in our view. NCR estimates that SEK 111bn of Swedish corporate bonds will mature through the remainder of 2020, adding to domestic corporate bank debt that needs to be rolled over. See Nordic bond maturities face uncertain market conditions, 12 Mar. 2020.

Analyst contact details:
Patrik Lindgren, +46 708 627 772, patrik.lindgren@nordiccreditrating.com
Sean Cotten, +46 735 600 337, sean.cotten@nordiccreditrating.com

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