The Nordic Lending Landscape: Trends in Corporate Credit Through COVID-19

Nov 2020

The unprecedented market turbulence of 2020 has resulted in challenges in raising middle-market debt in the Nordic region, as the syndicated banking loan market shut down and commercial banks retreated from lending. However, debt funds are expanding their position across Europe, generating extremely attractive returns for investors in a marketplace where high quality investments are proving difficult to identify.

Since 2012, debt funds are responsible for more than 1,800 transactions in the UK, France and Germany. At the start of 2020, these funds were sitting on $60 billion in dry powder.

The debt market in the Nordics region is unique, as where well-managed and relationship driven commercial banks have provided a for are strong debt sources and the high liquidity in the bond market has underpinned many middle market transactions at competitive terms. Historically, the strong banks and high yield bond market have made for limited competition among other lenders. For this reason, debt fund market penetration in the Nordics has trailed behind the rest of Europe—but that will change fast in the next five years.

This year marked a turning point for the lending landscape in the Nordics, as private debt players now have access to significant capital. Borrowers and lenders alike are following development of debt funds in the Nordics alongside other key financing channels in the region.

Navigating the Pandemic and Beyond

At the beginning of the pandemic, sponsors turned quickly to supporting their existing portfolio companies’ management teams, working to ensure the survival and continuity of these businesses. Lenders focused on confirming businesses had necessary liquidity to survive COVID-19, evaluating long-term strategy, and establishing the right capital structure for each company. Though many expected high levels of distress in 2020, lenders encountered few highly problematic cases, allowing them to explore new investments in addition to supporting existing portfolio companies.

Although risk appetite among investors has bounced back since the spring, it is not quite at pre-COVID levels. Lenders view the current moment as a time to be cautious. Because central banks provided unprecedented levels of stimulus during the crisis, we have not yet seen the full impact on the economy. Once the damage can be assessed, lenders anticipate a wave of bankruptcies in the beginning of 2021.

Currently, direct lending makes for less than 5% of middle market financing transactions in the Nordic region, compared to more than half of transactions in the UK. As banks in the Nordics face increasing regulation and capital requirements, alternative credit providers have taken advantage of the opportunity to provide competitive solutions.

Looking to 2021, sponsors will look to strike a balance between protecting their current portfolio and finding new management teams to partner with. This balance hinges on ensuring strong relationships with local debt players in the Nordic market. Credit providers have become increasingly selective in who they choose to engage with throughout this crisis, making relationship development a key piece to completing deals.

To learn more about how the lending landscape in the Nordics has been impacted by the pandemic, submit a request below to access the full recording of our recent panel with representatives of Cordet Capital, FSN Capital, SEB Special Situations and Ture Invest, hosted together with Hannes Snellman.


Please complete the form below to request access to the full recording



  • Learn more about the lending landscape in the Nordics and how it has been impacted by the pandemic.

  • Submit the request form below to access the full recording of our recent panel with representatives of Cordet Capital, FSN Capital, SEB Special Situations and Ture Invest, hosted together with Hannes Snellman.
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