Swedish credit markets tightening according to Catella

Credit availability has worsened noticeably in Sweden during the second half of 2018 as markets have tightened and pricing of credit increased. While property companies maintain a positive view on the credit market, uncertainty looms as credit margins seem to rise in the coming months. These are the findings of the most recent edition of CREDI (Catella Real Estate Debt Indicator) released by Catella this week.

In a press release, Martin Malhotra, Project Manager at Catella, says that this year’s fourth CREDI survey appears to confirm a shift in the credit market, where access to credit has continued to worsen gradually.

“Debt is still attractively priced when it is available, but the access to debt is tightening. Furthermore, we have observed a trend since September last year where surveyed banks and property companies have held a fairly positive view of the current credit climate, but their view of the future development has been more pessimistic. However, this anticipated negative development has yet to materialise. In fact, the average interest rate of listed property companies has continued to fall to a record low 2 per cent,” Martin Malhotra, says.

Arvid Lindqvist, Head of Research at Catella, predicts that the effects of the central banks reducing their stimulus programs and tightening up liquidity will become apparent and that it will also affect the Swedish bond market.

“In particular, the market will demand higher returns for risk, which will make debt financing more expensive for small actors that are perceived to have higher risk. Large actors with low-risk business models, on the other hand, will still be able to find attractively priced debt,” says Arvid Lindqvist.

The full CREDI report may be downloaded in the analysis section of Nordic Real Estate Update, or here.

Sverrir Thór