Nordic cross-over
From government and covered bonds to the more speculative segments of high yield bonds, the Nordic bond market has a lot to offer.
Dating all the way back to the 18th century, the Danish covered bond market has a rich history and can still boast of having one of the largest and most active markets in Europe. At the same time Norway has a strong tradition when it comes to corporate bonds and high yield issues.
Nordic fixed income total market volume development by issue category since Jan 2008 in NOK billion:
Digging into this regional market, we find that the investment grade and high yield bonds combined amount to approximately 1800 bln EUR in total. As can be seen in the chart above, this market has experienced a strong growth over the last 10-15 years. As mentioned, covered bonds have a long and strong history in the Nordic region and still make up around 50% of the total market. Government bonds, municipalities and other government guaranteed issuers account for another 18 % of outstanding bonds in the universe.
Interaction between markets and currencies has increased as investors and issuers alike have become more active across the borders.
By excluding covered and government/government-related bonds from our dataset we get an estimate of the corporate and financial credit universe. On this measure, we find that the Nordic corporate and financial market is around 600 bn EUR all in all.
Market distribution by issue type:
Source: Stamdata, Swedbank Credit Research, DNB Asset Management (further analysis)
