Nordea helps public sector borrowers finance COVID-19 response
Public sector borrowers are issuing bonds to finance the emergency and stimulus response to the coronavirus outbreak, and Nordea is on the front line.
The COVID-19 pandemic is affecting the global capital markets in various ways, but at least one segment will see activity surge – the public sector.
Public sector borrowers have already returned en masse to the primary bond market to start the financing of various emergency and stimulus packages launched in response to the coronavirus outbreak. The action among public sector borrowers will come across the SSA (sovereigns, supranationals & agencies) sector, with most borrowers having already announced increased funding budgets.
In addition to the increased support from governments, the supranational and agency borrowers, such as the European Investment Bank, World Bank, German development bank KfW as well as Nordic issuers, will constitute an important channel for fighting the impact of the pandemic.
“Nordic public sector finances have gone into this pandemic in very strong shape, and the Nordic SSA sector is well positioned for the increased funding needs via solid underlying fundamentals and a wide investor base,” says Kamal Grossard-Amin, who is in charge of the SSA Debt Capital Markets origination at Nordea.
“As in the previous financial crisis, the SSA sector will also step up now with a fast response to secure the funding needed to support businesses and local communities in surmounting the difficulties ahead,” he adds.
A commitment to our clients and society
The SSA issuers are entering the market with transactions highlighting the mobilisation of funds to alleviate socioeconomic and health risks posed by the current global crisis. This would include, for instance, public healthcare efforts, supporting SME businesses and social security expenditures. Yesterday, Nordea acted as joint lead manager in a SEK 3bn Sustainability Awareness Bond (SAB) by the European Investment Bank where the use of proceeds has been extended to include financing directly related to the fight against the COVID-19 pandemic.
“With 98% of the COVID-19 related EIB bond sold into the Nordic region, it highlights the strong commitment that also Nordic investors have to putting money to work where it really counts in these times,” says Grossard-Amin.
As the biggest bank in the Nordics, Nordea has a special responsibility to our clients and societies during these tough times.
“Nordea is the largest arranger of SSA/public sector bonds in the Nordics. In times like these, it is important that we can help our clients finance their operations that ensure a functioning society,” says Antti Saha, Head of DCM at Nordea.
In addition to helping public sector borrowers finance the COVID-19 response, Nordea is also offering instalment-free periods to personal and business customers in need of help because of the outbreak, as well as other credit facilities.
The global landscape has been jolted, partly due to the global trade war. This also affects Sweden, causing households and businesses to hesitate. However, the impact on growth is expected to be limited. There are conditions in place that will help to continue last year’s gradual recovery of the Swedish economy. Inflation will likely decline next year, but a stronger economic climate should reduce the Riksbank’s need to ease monetary policy.
As a small, open economy Denmark is traditionally highly sensitive to global developments. So the trade war is definitely bad news for economic activity in Denmark. However, it comes at a time when the Danish economy is exceptionally well prepared to handle the wave of uncertainty flowing across its borders. This is mainly due to a substantial savings surplus, solid public finances and a flexible labour market. Combined, this makes Denmark well prepared to handle the new global trends.
The cautious growth seen in the Finnish economy is at risk of hitting a tariff wall. Lower inflation and interest rates are boosting purchasing power, but increased uncertainty threatens to put private consumption and investment on hold for a little longer. Housing market activity has increased, but prices are not rising yet. The oversupply in the rental market is still discouraging new construction.
