A $15 Billion Refinancing Wave Has Bankers in Sweden Regrouping

(Bloomberg) -- 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.

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.

Sweden’s property industry has undergone a dramatic shift in how it funds itself in recent years, moving from bank debt into bonds that are often unrated and high yielding. The boom in real estate issuance means property debt now dominates the country’s junk bond market.

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Catella’s head of research, Arvid Lindqvist, says Swedish property companies will have a “big refinancing need” over the next 18 months, totaling 140 billion kronor ($15 billion).

As a result, he expects “a lot of listed property companies in Sweden to become net sellers of assets given a need to refinance debt amid higher credit spreads.”

Catella is bringing in Jacob Bruzelius to head the debt advisory and restructuring unit of its corporate finance team in Stockholm. Bruzelius, who is due to start in August, will help expand Catella’s presence in what it views as an increasingly interesting market.

“The financial system is tightening,” which is creating opportunities to win more business, Wingmark said.

If the bond market remains too expensive for some property firms, alternative financing such as direct debt will become more common, according to Catella.

“There’s an interest from institutions to invest via direct lending, which we haven’t seen so much of in Sweden up until now,” said Wingmark. “We’re having a lot of contact with domestic and international investors who are looking for new ways of financing.”

Catella is far from alone in positioning itself for growth in alternative asset classes such as direct lending in the Nordic region.

Last month, Capital Four added to its direct lending team, while the chief executive of Proventus Capital Management recently said his firm has “a lot of liquidity to invest” in private credit in the wake of the crisis.

“Investors are changing their priorities,” Catella’s Lindqvist said.

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