THE EXPANSION OF THE SWEDISH HIGH YIELD CORPORATE BOND MARKET - An abductive research of the development and nature of the Swedish high yield corporate bond market of the 2010s

Detta är en Kandidat-uppsats från Göteborgs universitet/Företagsekonomiska institutionen

Sammanfattning: The time period spanning from 2010-2020 was to the Swedish economy initially characterizedas a phase of recovery from the financial crisis of 2007-2008, and furthermore a decade ofrather stable economic growth without any major disrupting elements of crises or recessions.In this overall favourable economic environment, the corporate bond market, and moreexplicitly - the high yield corporate bond market, has stood out with an extraordinary growthof over 1000% during the given time period. This is to be compared with its historicallydominating counterpart of loaning through main financial institutions that grew with 269%.The dramatic growth trend of the high yield corporate bond market raises questions of whatmay have caused this development and the possibility of changed conditions regarding howSwedish companies choses to finance themself. The intent with this thesis was to analyze theSwedish high yield corporate bond market with respect to market characteristics such asprominent industries, composition and underlying cause(s) of the recent growth trend of thelast decade. Only non-financial corporations and bonds issued on the Swedish market weretaken into account. The thesis is based on broad quantitative data in combination with seveninterviews. The empirical section aims to cover three different perspectives of the market inorder to get an objective view of the market. All data aggregated in the empirical sectionshowed strong signs of an emergent high yield corporate bond market. The Swedish corporatebond market for non-financial corporations within the high yield segment measures up to thesize of 110 billion SEK by 2020, where the real estate sector is the most prominent industry inthe high yield segment as it stands for 45% of the market. Further industries which account fora large part of the market are the industrial and technology sector. A combination of factorsare what constitutes the particular growth trend in the high yield segment, where a low reporate in combination with harder requirements of core capital of conventional banks arerepresented as major factors of the expansion. The high yield market has also rapidly beengrowing as a result of an increasing recognition and rationalization of the high yield corporatebond market and thus developed into a mature market.

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