We have all followed the horrible actions in Ukraine the past two plus months and hope it will come to an end soon. The invasion has affected us in different ways, some more than other of course with millions of people fleeing their home country not knowing where they’ll end up or for how long and others forced to defend their country with their own lives at stake.

Our lives here in the Nordics however have run its usual course and the NPL market is still active in the Nordics, just as before. Sweden and Finland are discussing the possibility of becoming NATO members with Finland planning to have a public vote.

Macro trends in Europe since the invasion Feb 24

The Russian MOEX index collapsed the days leading up to the invasion and was down 44% between the 16 and 24 Feb (this after already have been on a decline since October), it has since recovered a bit and is now (4 May) “only” down by 5% since Feb 16.

The Nordic indexes has changed with between -3,2 and +9,6 percent since the invasion (24 Feb to 4 May) with Sweden (OMXS30) declining the most and Denmark (OMXC20) gaining the most. Sweden and Finland (OMXH25) both declined over 8% the days leading up to the invasion (16 – 24 Feb) and then continuing down the following two weeks with Finland dipping 16% 16 Feb – 8 Mar and Sweden almost 13%.

We can also see similar effects in the bigger markets in Europe where UK (FTSE100) and Germany (DAX) both declining between 5 and 8 percent leading up to the invasion and Germany continuing down the weeks after with a total decline of 16,5% (16 Feb – 8 Mar). Both markets have recovered fairly well with UK at +4% and Germany at -1,8% since the invasion (24 Feb – 4 May).

Market overview:

In 2020, we had significantly lower prices for Forward Flows than before and a maximum of 6-12 months agreement compared to the previous standard which was 12-24 and up to 36 months. Large number of transactions available in the Nordic market for both OO and FF and especially within Bank & Finance. Requests for longer contracts are again up on the table with up to 24 months while the buying side tries to reduce this more to 12 + 12 months arrangement and instead of having the opportunity to adjust the price after 12 months.

The price level of unsecured loans in the segment 300 00 – 500 000 SEK has remained low while we see that there is a lot of competition now for the lower amounts, which once again leads to higher prices in that segment. At the moment, there are too many unsecured loan providers on the market and those with slightly more generous credit terms will have trouble selling off their NPL portfolios to the price levels that they calculated with.

Large increase in Sweden in the number of applications for debt restructuring but at the same time also an increased amount of rejections as many applicants have not made sufficient attempts to sort out their finances first. KFM has informed about this now after the summer. In Finland, tax refunds have been at record levels, which also had a positive impact on  return of investments during August and September. Norway has had a steady collection and flow of cases for most of the Corona and although there are some concerns in that market that there will be backlogs around consumers’ debt picture, the prospects are good there. In Denmark, there have been a lot of large portfolio deals within Bank & Finance during the summer and the start of the autumn. A tightening within the credit terms for e-commerce has resulted in several Nordic e-retailers choosing to leave Denmark now and leaving OO-portfolios available on attractive levels.

Increased competition in the Nordic region regarding the purchase of NPL portfolios as several of NPL buyers have been reloaded with funds to invest either through new bonds or through collaborations with major institutional investors. Most players also believe that there will be consolidation in the debt collection and NPL market within the next few years. Exciting times ahead!

Please feel free to contact us for more dialogues and opportunities around the Nordic NPL market.

/COO, Johan Gustafsson