December 1, 2017 / 6:26 AM / in 16 days

UPDATE 1-Nordic high-yield debt at record, driven by shipping, real estate

(Adds quotes, detail)

By Henrik Stolen

OSLO, Dec 1 (Reuters) - Nordic companies have raised record amounts of cash from the sale of high-yield bonds in 2017, surpassing the previous all-time high set in 2014, data from brokers DNB Markets showed on Friday.

With total issues equivalent to about 112.5 billion Norwegian crowns ($13.54 billion) since the start of the year, junk bond issues are now about 10 billion crowns ahead of the former record and more than double the 54 billion seen in 2016.

While oil companies were traditionally the largest issuers in the Nordic region, the slump in crude prices that began in 2014 and stretched to 2016 resulted in sharp cutbacks in the industry’s investments and thus its need for cash.

In 2017, Swedish real estate firms and Norwegian shipping companies have been the leading industries, accounting for about 45 billion crowns combined, DNB data showed.

“It’s the same drivers, but different industries using this market to get financing,” said Paal Ringholm, head of credit finance at Sparebank 1 Markets, pointing out that shipping and real estate, like oil, are capital-intensive sectors.

In November, Nordic companies raised more than 14 billion crowns from high-yield bonds, making it the third-most active month of the year behind June and September.

“On the demand side, it is still the chase for return that is the main driver. On the supply side, there are both structural and cyclical factors,” said DNB Markets credit strategist Magnus Vie Sundal.

He estimated the market could reach 120 billion crowns this year with a few weeks left to do new deals.

As bank regulators have tightened capital requirements, Nordic banks have scaled back lending to many large corporations, leaving the bond market as the only real alternative for many.

Among the latest issues, Finnish container transporter Containerships Plc placed a 60 million euro ($71.51 million)bond.

“We are pleased with the strong interest shown in the Company from both current and new bond investors,” Chief Executive Kari-Pekka Laaksonen said in a statement.

On Wednesday Finnish retailer Stockmann raised 250 million euros in an oversubscribed issue, while Swedish real estate firm Sagax secured a 600 million Swedish crowns ($71.70 million) bond.

Still, investors’ willingness to buy bonds from Swedish real estate companies has cooled off in recent weeks, Ringholm of Sparebank 1 said, adding that the industry could face a downturn.

“What I have written to my customers this autumn, is to buy those segments that have already been through a recession. In Norway that’s energy and shipping, and be very reluctant towards those segments that could be hit, and that is real estate in Sweden,” he said. ($1 = 8.3102 Norwegian crowns) ($1 = 0.8390 euros) ($1 = 8.3680 Swedish crowns) (Editing by Terje Solsvik)

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