Summary of Nordic Bonds 2022 and beyond: Volatile Energy Prices and ESG Considerations Impacting Market Activities

Kicking the webcast off, our credit analysts Thomas Eriksen and Mark Josefson analysed the developments of 2022, in particular with a closer look at German issuers in the bond market.

In 2022, the Nordic High Yield Bond Format continued to attract a broad international investor base through increasing issuer sector diversification and a historically low default rate. With a consistently growing proportion of Euro-denominated bonds in the market, the format is also increasingly being adopted by German issuers since the introduction of the format in Germany in 2018.

Following up on German issuers, the leading bond trustee service provider, Nordic Trustee, is expanding into Germany and Frankfurt, opening its first office outside of Scandinavia. Nordic Trustee's Stefan Lutringhauser and Fredrik Lundberg discussed their expansion plans and how they see the bond market developments.

Our energy market specialists Nadia Martin Wiggen and Lars Ove Skorpen gave their insights into this year’s developments and the outlook for 2023. The oil & gas markets started 2022 with low OECD inventories, and spare production capacity was steadily drawn down throughout the year. The oil market is set for a sharp rebound in the first half of 2023, with Chinese oil demand expected to increase in the first quarter of 2023 after Covid Zero policies limiting demand in 2022.

In the power markets over the past two years, we have seen increased power interconnection between the Nordics and Central Europe. 2022 saw unprecedented high prices for energy, and forward power prices indicate still higher price levels in 2023 before easing from 2024 onwards, hence investments in renewables should be profitable.

On the topic of renewable energy, Schletter Group demonstrated how they have been successful in securing the necessary funding in turbulent markets to take advantage of the energy market transition. Similarly, sustainable corporate bonds have experienced tremendous growth in recent years and have become increasingly relevant in global bond markets. The presentations by Position Green and Greenfood Group highlight how Sustainability-Linked bonds have become an increasingly relevant instrument in the European corporate bond market, as they allow issuers to finance general corporate purposes and not just specific investments while aligning the issuers’ corporate ESG strategy with their bond financing.