Sweden

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.

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.

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.

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.

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.

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.

Telia Co. AB is in talks to sell its indirect stake in Turkcell Iletisim Hizmetleri AS, Turkey’s biggest mobile-phone carrier, to the country’s sovereign wealth fund for about $530 million, Bloomberg News reported. Negotiations are still ongoing and are in an advanced stage, but no agreement has yet been reached, Telia said in a statement. Telia is the largest shareholder in Turkcell via the holding company Turkcell Holding AS.

Sweden’s highly contested response to Covid-19 left much of the economy open. Even so, the country is now headed for its worst recession since World War II, Bloomberg News reported. Scandinavia’s biggest economy will shrink 7% this year, Finance Minister Magdalena Andersson said on Tuesday. Shortly after she spoke, the debt office revealed an historic 30-fold spike in borrowing to cover emergency spending amid record job losses. A separate survey showed 40% of businesses in Sweden’s service sector now fear bankruptcy.

Scandinavia’s biggest network airline, SAS AB, is eliminating as many as 5,000 jobs, marking the first permanent staff cuts by a major European carrier in the face of collapsing travel demand, Bloomberg News reported. The Stockholm-based company said Tuesday that the dismissals, amounting to 40% of the workforce, are necessary because employees have an average notice period of six months and it needs to prepare for what may be years of sluggish demand.