Nordic high-yield debt at record, driven by shipping, real estate (updated)
01/12/2017 06:24
(Adds quotes, detail)
By Henrik Stolen
OSLO, Dec 1 (Reuters) - Nordic companies have raised record
amounts of cash from the sale of high-yield bonds in 2017,
surpassing the previous all-time high set in 2014, data from
brokers DNB Markets showed on Friday.
With total issues equivalent to about 112.5 billion
Norwegian crowns ($13.54 billion) since the start of the year,
junk bond issues are now about 10 billion crowns ahead of the
former record and more than double the 54 billion seen in 2016.
While oil companies were traditionally the largest issuers
in the Nordic region, the slump in crude prices that began in
2014 and stretched to 2016 resulted in sharp cutbacks in the
industry's investments and thus its need for cash.
In 2017, Swedish real estate firms and Norwegian shipping
companies have been the leading industries, accounting for about
45 billion crowns combined, DNB data showed.
"It's the same drivers, but different industries using this
market to get financing," said Paal Ringholm, head of credit
finance at Sparebank 1 Markets, pointing out that shipping and
real estate, like oil, are capital-intensive sectors.
In November, Nordic companies raised more than 14 billion
crowns from high-yield bonds, making it the third-most active
month of the year behind June and September.
"On the demand side, it is still the chase for return that
is the main driver. On the supply side, there are both
structural and cyclical factors," said DNB Markets credit
strategist Magnus Vie Sundal.
He estimated the market could reach 120 billion crowns this
year with a few weeks left to do new deals.
As bank regulators have tightened capital requirements,
Nordic banks have scaled back lending to many large
corporations, leaving the bond market as the only real
alternative for many.
Among the latest issues, Finnish container transporter
Containerships Plc placed a 60 million euro ($71.51
million)bond.
"We are pleased with the strong interest shown in the
Company from both current and new bond investors," Chief
Executive Kari-Pekka Laaksonen said in a statement.
On Wednesday Finnish retailer Stockmann STCBV.HE raised
250 million euros in an oversubscribed issue, while Swedish real
estate firm Sagax SAGAa.ST secured a 600 million Swedish
crowns ($71.70 million) bond.
Still, investors' willingness to buy bonds from Swedish real
estate companies has cooled off in recent weeks, Ringholm of
Sparebank 1 said, adding that the industry could face a
downturn.
"What I have written to my customers this autumn, is to buy
those segments that have already been through a recession. In
Norway that's energy and shipping, and be very reluctant towards
those segments that could be hit, and that is real estate in
Sweden," he said.
($1 = 8.3102 Norwegian crowns)
($1 = 0.8390 euros)
($1 = 8.3680 Swedish crowns)
(Editing by Terje Solsvik)
((henrik.stolen@thomsonreuters.com; +47 952 79 474; Reuters
Messaging: henrik.stolen.thomsonreuters.com@reuters.net))
Keywords: NORDICS HIGHYIELD/