Nordea Bolsters Bond Arranging Lead in Booming Nordic Market

  • Non-financial corporate bond sales already exceeding last year
  • Reopening of high yield market, real estate deals boost volume

Nordea Bank AB strengthened its lead as the top arranger of Nordic company bond sales in the first half amid a rush of non-financials issuance from borrowers including Nokia Oyj and Avinor AS to more than the whole of 2016.

The Swedish lender arranged 11.4 billion euros ($12.4 billion) equivalent of deals for firms including Kojamo Oyj and Neste Oyj in the six months to June 30 to grab a market share across all sectors of almost 12 percent, according to Bloomberg league table data. Total credited deal volume rose 28 percent to 97.1 billion euros, with Danske Bank A/S and SEB AB the next most-active arrangers.

Issuers are increasingly using asset liability management tools “to take care of refinancings early, which has been a driver for some of the issuance we’ve seen,” said Povl Bak-Jensen, head of syndication at Nordea Markets in Copenhagen. An emergence of the real estate sector, both locally and in the euro market, alongside a “fairly complete reopening” of the Nordic high-yield market among both investors and borrowers have also boosted volumes, he said.

Investor Base

Non-financial borrowers including Telia Company AB and Ericsson AB raised 23.1 billion euros in the first six months of this year, beating the 21.3 billion euros raised in full-year 2016. Firms are increasingly choosing to sell local currency debt as the pool of investors buying the securities deepens.

“There is very positive growth in the credit bond funds and as a result a deepening and granularity of the investor base in Sweden,” said Derry Hubbard, global co-head of debt capital markets at Danske Bank. “That has opened up a more diverse range of opportunities for borrowers, especially in the SEK currency.”

The lure of Nordic debt saw Societe Generale SA, France’s second-largest bank by market value, enter the market for the first time in January to sell Swedish kronor senior non-preferred notes, while carmaker Volkswagen AG opted for a dual-currency issue when it raised Nordic market funds in April. Non-domestic issuers are likely attracted to the market given the strength of the Nordic economies, Danske’s Hubbard said.

Both Nordea, which is currently considering moving its headquarters away from Sweden, and Danske Bank expect robust second half issuance, although volumes may soften slightly. “Only a major pick-up in geopolitical risk or a significant reprising of equity and credit could derail issuance conditions,” Danske’s Hubbard said.

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