Sweden

Sweden’s Finance Minister Magdalena Andersson, the frontrunner to replace the outgoing prime minister, said a robust economic recovery leaves room for an expansionary budget in the upcoming election year, Bloomberg News reported. The Harvard-educated Andersson could become the first woman leader in the largest Nordic economy that’s coped with the pandemic much better than most rich peers, helped by robust state finances. Yet she would face a fragmented political system where agreements on changes needed to keep the welfare state afloat are increasingly difficult.
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Sweden’s government refused to back down after the left-wing opposition threatened to try to unseat Prime Minister Stefan Lofven over plans to deregulate the country’s rental housing market, Bloomberg News reported. Minister for Justice Morgan Johansson said the Cabinet will continue to prepare a formal bill, after the Left Party demanded it to drop the intention to allow landlords charge market rates for new rental apartments. The government expects to come back with a final proposal late this fall, Johansson said.
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Sweden’s banks are gearing up for a fresh fight with their government to try to block a proposal that singles out the financial industry for an extra tax, Bloomberg News reported. The Social Democrat-Green coalition government has long made clear it intends to impose a levy on banks, which it argues represent a bigger risk to economic stability than most other industries.
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Sweden’s economy is poised for a sharper rebound than the government previously expected as its manufacturers make a strong comeback, Bloomberg News reported. Gross domestic product will grow 3.2% this year, compared with the 3% predicted in December, Finance Minister Magdalena Andersson told reporters in Stockholm on Monday. Next year, the expansion is seen at 3.8%, up from the previous forecast of 3.7%.
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Investors are starting to worry that the Riksbank’s purchases of covered bonds are fanning a housing market that’s already red hot, Bloomberg News reported. Owen Winrow, who helps manage 195 billion kronor ($24 billion) at Afa Forsakring, says his concern is that “with a housing market on fire,” the Riksbank “might be playing a dangerous game.” Winrow also notes that the Riksbank has probably reached the limit of what it can do with its quantitative easing program for government bonds, “so there isn’t too much choice, I guess, than buying covered” bonds, he said.

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Sweden’s Handelsbanken reported a fall in quarterly net earnings on Wednesday due to restructuring costs, though the bank’s loan portfolio continued to weather the impact of the coronavirus pandemic with ease, Reuters reported. Handelsbanken said in its report that results had been impacted by a provision for a restructuring reserve of 1.47 billion crowns referring to the branch closure and IT investment programme the bank unveiled in September.

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Scandinavian carrier SAS AB has secured enough backing from bondholders for a debt-to-equity plan that it says is needed to stave off bankruptcy, Bloomberg News reported. At a crunch meeting in Stockholm on Wednesday, an overwhelming majority of creditors voted in favor of the proposals to convert their holdings into equity and new notes, according to Lars Lonnquist, a portfolio manager at Spiltan Fonder AB and acting chairman of a committee of SAS noteholders.

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Scandinavian budget carrier Norwegian’s Swedish division has been denied a credit guarantee by the Swedish national debt office, FlightGlobal reported. The office states that it has “decided to reject” the application because guarantees can only be granted to airlines considered financially viable on 31 December 2019. It says there was a “very high risk” at the time – even before the air transport downturn – that Norwegian would not be able to meet its financial obligations, and that it would not be able to manage further debt.

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EU competition regulators on Monday cleared a 1-billion-euro ($1.2 billion)(915.40 million pounds) plan by Denmark and Sweden to recapitalise virus-hit SAS, saying the measure would prevent the Scandinavian airline’s insolvency, Reuters reported. The plan is part of a larger recapitalisation package which will result in private investors holding a significant stake in SAS following the conversion of outstanding privately-held debt instruments into equity.

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Bankers in Sweden are positioning for a wave of debt deals from real estate issuers, as the industry tries to move out of increasingly costly borrowing arrangements, Bloomberg News reported. Catella AB, a Swedish boutique advisory firm specializing in the property sector, has been hiring to make sure it has enough bankers to handle the development. “The demand for different sources of debt financing will increase in the Swedish real-estate market going forward,” Carl Wingmark, head of property advisory at the firm, said in an interview.

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