Alternative debt financing an opportunity in the Nordics

19 July 2021 2 min. read

Debt refinancing among distressed assets is set for a spike in Nordic markets – causing non-traditional financing players to take a growing interest in the region. spoke to Dan Andersson at Alvarez & Marsal to better understand the market opportunity.

Dan Andersson is Alvarez & Marsal’s Hamburg-based head of Nordic Operational Restructuring and CRO Services. According to him, several factors pave the way for new debt financing models – and players – in the Nordic market.

For one, a host of big-ticket investors are fighting for the region’s prized assets – what Andersson describes as “traditionally attractive investments” – leaving few investment opportunities for smaller investors, and a dearth of funding for financially weaker businesses. An already small pool of attractive prospects shrank further amid the pandemic-induced economic crisis last year.

Dan Andersson, Managing Director, Alvarez & Marsal

Topping this off, myriad Nordic businesses are reaching debt maturity in the near future – putting funding at a premium for the vast majority. While challenging on the one hand, these market factors create a strong market opportunity for alternative investment models.

Alternative investment models

“The debt levels are piling up and when the dust settles after the pandemic, mountains of debt will have to be refinanced and we expect to see increased activity in the restructuring space. The oncoming wave of restructurings may entail business plan rewrites and new balance sheets.”

“Distressed assets and debt/specialist instruments allow for alternative ways to invest with attractive returns, which has given rise to a higher presence of domestic and international investors such as debt and restructuring-focused funds in the Nordics.”

In an April report, Bloomberg presented London-based debt management firm Global Loan Agency Services as an example of new entrants in the vibrant Nordics market, looking to support distressed assets via specialised debt instruments. In the eyes of Andersson, the Swedish real estate market might be a good starting point for these new entrants.

“According to colleagues in the market specialised in advising real estate companies, the demand for different sources of debt financing will increase in the Swedish Nordic real-estate market going forward.”

He continued: “the boom in the real estate issuance and the move from bank debt into high-yieldbonds has led to the real estate debt now dominating the junk and high-yield bond market, which is why alternative sources of debt financing will be of interest during this wave of refinancing.”