A high yield handbook
1. The corporate bond market
The Nordic capital market is in a period of exciting change. The banks’ new capital adequacy rules have resulted in companies being financed by bank loans to a lesser extent than before. More and more the corporate bond market is taking the banks’ place and offering companies an alternative opportunity to expand with borrowed capital.
JOOL is in the midst of this change and, thanks to its leading market position within corporate bonds in the SEK 30-200 million segment, is helping to guide development. Today over SEK 100 billion in corporate bonds is issued every year in the Nordic region, which is several times more than just a few years ago! Despite this growth, the Nordic market is still relatively small compared to the North American market, and we expect continued high structural growth for many years to come.
As a result of the rapid developments, corporate bonds are new to many investors in the Nordic countries. Corporate bonds have properties that differ in many ways from both shares and government bonds. This is why we consider it important that knowledge about this asset class be spread, and our aim with JOOL Academy is to help build such knowledge.
We want JOOL Academy to be a reference work on our investors’ desks. The goal in the long run is to contribute to better investment decisions. JOOL Academy comprises several parts, whereby some of the main parts are about the terms of the bond indenture (contract), the relationship between a bond’s price and return, and how a default affects the value of bonds. The text may contain some words that are new to you the reader so we have added a glossary at the end.
Stefan Westfeldt, PhD
Head of Asset Management – JOOL Markets AS
Stefan Westfeldt has been Head of Asset Management at JOOL Markets since 2017. He has extensive experience of the credit market, including as Senior Portfolio Manager and Head of Fixed Income at Storebrand Kapitalförvaltning in Norway (the largest life insurance company in the Nordic region). Stefan has a PhD from the School of Business, Economics and Law at the University of Gothenburg and lectures on the subject of Advanced Credit Analysis at the Norwegian School of Economics.