SWEDEN Law and Practice Contributed by: Niklas Sinander, Elin Carlsson, Axel Schelén and Björn Wendleby, Harvest Advokatbyrå
stricter covenants, higher pricing and lower leverage than before. 1.3 The High-Yield Market Sweden, with its many fintech start-ups and real estate companies, has been an attractive market for investors over the years. As the Swedish economy has been pushed into recession, both banks and other lenders have taken a more careful approach towards borrowers in general. The Swedish bond market gen- erally offers borrowers less strict and more flexible covenants compared to traditional bank loan financ- ing. Given the global conflicts and geopolitical uncertain- ties in the financial market, issuers tend to raise smaller sizes of debt in the bond market. While the high-yield market has shown signs of stabilisation after the sharp slowdown in 2022–2023, economic volatility and high interest rates continue to limit transaction volumes. As a result, many borrowers have turned to alternative sources of financing. Flexibility to reallocate amounts (structural flexibility) between different tranches in multi-tranche facility deals have been used more frequently to facilitate syndication processes. The real estate sector remains the largest sector in the Swedish high-yield market, although its share of the total outstanding amount continues to decline. This is largely due to the sector’s ongoing difficulties in adapting to higher interest rates, lower property valu- ations and a slowdown in transaction activity. How- ever, the Nordic high-yield market was active at the beginning of 2025, with rising issuance volumes and a growing issuer base, accompanied by a more active primary and secondary market than in much of Europe and the USA. 1.4 Alternative Credit Providers In recent years, alternative credit providers have offered borrowers an alternative to traditional bank loan financing and bond financing. Such alternative credit providers may include direct lenders, crowd- funding and peer-to-peer lenders. Alternative credit providers may offer borrowers faster funding and
more flexible terms and conditions than those typi- cally available on the traditional loan market. 1.5 Banking and Finance Techniques The share of loans provided by alternative lenders in the Swedish market continues to increase. Credit funds, direct lenders and peer-to-peer lenders offer alternative financing (particularly for small and medi- um-sized companies) to traditional bank loan financ- ing and bond financing. Financing through HoldCo structures has also increased, often in combination with payment-in-kind (PIK) interest and structured subordination to senior loans. The Swedish fintech sector has grown significantly in recent years, resulting in new market entrants offer- ing more flexible financing solutions and an overall increasing number of companies offering banking as a service. Other direct lenders – not least institutional investors – also offer an alternative to traditional bank loans for borrowers on the corporate market. 1.6 ESG/Sustainability-Linked Lending The sustainability trend in the Swedish loan market continues to strengthen, with an increasing number of corporate borrowers entering into sustainability-linked loans with traditional banks. Key performance indica- tors in sustainability-linked loans continue to further develop market standards. Concurrently, the surge in green projects – particularly onshore wind power projects – has led to increased issuance of green loans in the Swedish market. Com- pared to many other industries, this segment has continued to expand despite heightened volatility in global economic conditions. However, some high- profile green projects have encountered severe issues recently, which may result in a decreased risk appetite among lenders financing similar projects. 2. Authorisation 2.1 Providing Financing to a Company Providing loan financing to Swedish companies is not itself subject to a licence. However, such services generally fall within the scope of the Swedish Act on Certain Financial Activities (SFS 1996:1006), provid-
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