NORWAY Trends and Developments Contributed by: Ida Marie Windrup, Markus Nilssen and Daniel Jovanovic, BAHR
The focus on green transition continues to be a domi- nant theme across Norwegian markets, though the path has proven more complex than initially anticipat- ed. Renewable energy companies have struggled with compressed profit margins due to increased compe- tition from both domestic and international players, alongside higher operational and development costs that have squeezed returns. While significant project finance deals were widely expected throughout 2024, they have not fully developed as anticipated, though the fundamental push for green energy investment is set to grow substantially, with potential offshore wind projects representing a particularly promising area for future development. Human rights and ESG integration in investment decisions Human rights and broader ESG considerations have become central to investment and lending decisions in Norway. Banks are now required under Norwegian legislation such as the Transparency Act ( Åpenhet - sloven ) and the OECD Guidelines for Multinational Enterprises, as well as EU rules including the Tax- onomy Regulation, Sustainable Finance Disclosure Regulation (SFDR), Corporate Sustainability Reporting Directive (CSRD), and forthcoming Corporate Sustain- ability Due Diligence Directive (CSDDD), to assess and disclose the sustainability and human rights impacts of their financing. European Banking Authority (EBA) guidance further obliges lenders to integrate ESG risks into credit processes. Consequently, borrowers and sponsors must demonstrate credible ESG and human rights compliance to secure financing. Nor- wegian financial institutions are increasingly embed- ding these assessments into due diligence, pricing, and lending decisions, while investors similarly factor ESG criteria into their investment strategies, recognis- ing their material impact on long-term value and exit opportunities. Norwegian bond market The Norwegian corporate bond market has remained very active throughout 2024 and during the first half of 2025 for both investment grade and high-yield bond issuances with record breaking growth in both out- standing volumes and new issuances.
The high-yield bond market has experienced truly exceptional performance throughout the period, build- ing upon the strong momentum that was established during 2023 and continued through 2024, with sub- stantial issuances spanning multiple industry sectors and demonstrating remarkable depth and liquidity. The year 2024 established a new record for new issue volumes in the Norwegian high-yield market, surpass- ing previous benchmarks and demonstrating the mat- uration and sophistication of this market segment. The outstanding performance reflects several con- verging factors, including improved investor confi- dence and attractive yield spreads relative to the US market and other European markets. The market has shown particular strength in sectors such as ship- ping, E&P, and oil services. Issuers look to Norway’s very active high-yield bond market to cover financing shortfalls. Nordic high-yield bonds are known for quick access to capital (often four to eight weeks to close), standardised simple documentation, and flexibility that sometimes exceeds conventional bank financing. With fewer maintenance covenants and the possibility to accommodate higher leverage levels, Nordic bonds attract both mid-sized and larger transactions. How- ever, maintenance covenants have become increas- ingly frequent for high-yield bond issuances with investors seeking early warning triggers. Historically, incurrence covenants have been more prominent. In contrast to other markets, the Norwegian high-yield bond market holds a larger market share (in terms of outstanding volume) than the Norwegian investment grade bond market, with many foreign issuers turning to the Norwegian high-yield market. The performance trajectory established during this period is anticipated to continue throughout 2025, supported by a robust pipeline of potential issuers and sustained investor appetite for Norwegian high- yield bonds. Market participants expect continued growth in issuance volumes, though at potentially more moderate levels than the exceptional perfor- mance witnessed in 2024. Historically, issues related to certain funds have made Norwegian bonds less suitable for immediate acquisi- tion financing (issuance of the bonds is normally sub- ject to successful marketing and acceptable pricing).
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