Good news for any Swedes seeking debt capital market jobs

Employment prospects for the debt capital markets teams within Sweden's investment banks could be given a boost this year by a new-found taste for issuing corporate bonds by local companies.

Companies in Sweden have traditionally relied on bank lending, which has become more expensive and difficult to secure as local banks look to shore up their capital ratios.

The corporate bond market in Sweden is still comparatively tiny, but already there's been an uptick in work for investment banks' DCM teams this year. Throughout 2011, there was SEK85.6bn worth of corporate bond issuance in Sweden, according to Thomson Reuters, predominantly by large firms such as SAS, TeliaSonera, Volvo and Electrolux. Loan issuance, meanwhile, amounted to SEK224.5bn.

This year, in January alone, SEK32.3bn worth of corporate bond deals have been issued and the expectation is that small and mid-cap firms will turn to debt capital markets as bank lending is harder to come by.  The government is also keen help to open up the market.

“It would be good if we in Sweden took more steps toward a larger, more transparent corporate debt market,” Peter Norman, financial markets minister, told  Bloomberg. “The financial industry has made a lot of money by trading equities and government debt so there’s been no real drive” to move into other sectors, he added.

Last year, Goldman Sachs topped the DCM league tables in Sweden, according to data provided by Dealogic, followed by Swedbank, Nordea, Deutsche Bank and SEB.

So far in 2012, Swedbank is first in the league tables, and Nordea, Barclays Capital, Svenska Handelsbanken and SEB comprise the remainder of the top five.

The large Nordic investment banks could certainly do with a boost. As we've mentioned previously, the large Nordic investment banks have suffered over the past two quarters. In line with their international peers trading volumes have slumped and advisory work has been thin on the ground.

Costs, particularly those related to employees, have remained high. At Handelsbanken, for instance, the cost-income ratio reached 134.3% in the fourth quarter, while Swedbank has started cutting staff in its investment bank.

Bloomberg suggests that Sweden currently lacks the liquidity, transparency and standardization required to attract investors to corporate bonds, but some key players have been trying to prompt regulators and the industry to help develop the market.