NORWAY Law and Practice Contributed by: Ida Marie Windrup, Daniel Jovanovic, Markus Nilssen and Steffen Rogstad, BAHR
1. Private Credit Overview 1.1 Private Credit Market
ment marked the first break with the long-standing “lending monopoly” previously conferred on banks in Norway. Moreover, on 1 August 2025, the Norwegian licensing regime was again amended to cater for the provision of credit through securitisation structures. Market participants widely believe that private credit will continue to gain significant traction, increasing its market share vis-à-vis Norway’s banking and debt capital sectors. 1.2 Interaction With Public Markets The Nordic bond market is very active, and there is an increasing trend to utilise Norwegian high-yield bonds as a source for acquisition financing, both domesti - cally and abroad. However, for bonds which are not underwritten or pre-committed, the lack of certainty of funds is a reasonable cause for concern, making such bonds less suitable for acquisition financings. This concern may, however, be mitigated through the bridge-to-bond solution. Certain market participants are offering an underwriting of the bond commitments. Subscriptions based on pre-commitments from inves - tors are also available. These solutions, if continued, will make the Norwegian high-yield bond market more competitive compared to traditional bank financing, in particular in acquisition financing. So far, the growth of the Nordic bond market in this space appears to come primarily at the expense of traditional banks, rather than private credit providers. 1.3 Acquisition Finance As mentioned in 1.1 Private Credit Market , private credit lending continues to rise in significance as a financing option for acquisition financings, in particu - lar, heavily leveraged buyouts. This is due, among other things, to the higher leverage and increased flex - ibility offered by private credit lending. Market obser - vations indicate a clear upward trajectory in this area, which is evident in both bond issuance and formats, and through direct bilateral agreements. 1.4 Challenges Historically, the primary challenge to the expansion of the private credit market in Norway was the regulatory framework. Lending constitutes a licensable financ - ing activity in Norway, which means that non-bank lenders must rely on an exemption from the licens -
In Norway, the private credit market is performing strongly with continuous growth in the last 12 months, despite the unique regulatory challenges in Norway which are addressed in 2.1 Licensing and Regulatory Approval . The Norwegian private credit landscape is character - ised by a gradual but meaningful shift away from the traditional bank-dominated lending environment. The current macroeconomic environment, while pre - senting challenges for borrowers due to elevated interest rates (with a current policy rate at 4%), has created opportunities for private credit providers who can offer more flexible terms and longer-term fixed- rate financing compared to traditional bank lenders operating in a volatile rate environment. The weak - ening Norwegian krone has also attracted increased international investor interest and M&A activity in Norwegian assets, creating opportunities for private credit fund sectors like aquaculture, technology, and renewable energy. Private credit funds provide an increasingly growing share of the finance required to support these trans - actions, mostly at the expense of traditional banks. Private credit providers offer more flexible terms than the local banks, including longer maturity periods and fixed interest rates, and are able to provide larger sums of credit, for instance, by forming a club of lend - ers on the largest transactions. International sponsors operating in the Norwegian market are well versed in direct lending structures from their experience in the London and New York markets, and they have been leading the charge from the borrower side, driving demand for flexible financing solutions that can sup - port complex transaction structures as well as difficult timing requirements. The regulatory environment is also evolving in favour of private credit expansion. On 1 January 2023, the Norwegian credit licensing regime was amended to cater for the establishment of European Long-Term Investment Funds (ELTIFs) in Norway, as well as rec - ognition of EEA-based ELTIFs. This legislative amend -
193 CHAMBERS.COM
Powered by FlippingBook