Key takeaways
- International capital is reshaping Sweden’s debt market
- Sweden’s traditionally consensual restructuring culture is beginning to shift
- Super senior lenders are sharpening their focus on control rights
- Swedish intercreditor documentation is adapting to more complex capital structures
Sweden’s financing landscape is going through a phase of rapid internationalization as global issuers tap Nordic bond markets at record levels and private credit players increase their Nordic focus and presence.
The Nordic high yield bond market posted its strongest first-half issuance on record during the first half of 2026, according to Pareto Securities, with non-Nordic issues representing 60 percent of primary activity. Meanwhile, Nordic private credit deal volume grew by more than 35 percent in the latter half of 2025, according to Deloitte, as international private credit players raise their exposure to the region’s stable economies. As the largest Nordic economy, Sweden has been at the forefront of this international expansion.
The beginning of a cultural shift
The high inflows of international capital are proof of Sweden’s thriving capital markets ecosystem, which has established itself as a crucial European financing hub. But as new entrants from around the globe enter the market, the norms that have governed intercreditor relations in the country for decades are changing.
Historically, traditional bank lenders and domestic fixed income investors led the Swedish financing market, which was characterized by a consensual and non-contentious approach to restructuring situations.
Banks have tended to sit at the same level of the capital structure and have shared the same security package, encouraging resolutions that serve the common interest. Until recently, Nordic bond market investors were also predominantly domestic institutions that knew each other well and collaborated to achieve shared objectives.
The growing constituency of foreign issuers and investors has shifted these parameters, introducing increasingly diverse capital structures and creditor groups into the market.
In Swedish bank clubs, there would typically be a relatively high degree of trust between institutions, with fewer concerns around how another creditor would behave. By contrast, in a situation where a Swedish bank is providing a super senior revolving credit facility (RCF) alongside a unitranche loan provided by an international direct lending fund, there may not be the same level of familiarity and trust among creditors if or when a challenging situation arises.
Traditionally, domestic bondholders in Nordic bond structures had closely aligned interests. More recently, however, the influx of a much larger proportion of international investors—including hedge funds, private credit funds and other players—has coincided with increasingly aggressive new money solutions that test the limits of unwritten equal treatment principles. This has raised concerns that majority bondholders are using ad hoc committees to secure more favorable positions, including through super senior structures, to the detriment of minority bondholders, who are often excluded from these committees and left without a seat at the table.
While these practices have not yet resulted in litigation, concerns of creditor-on-creditor violence are becoming more common—something that would have been unthinkable a few years ago. Lenders of super senior facilities in bond structures have largely been immune to these practices given the critical nature of working capital facilities to provide liquidity as part of any consensual solution. However, intercreditor arrangements remain acutely in focus for these lending banks.
Accordingly, foreign lenders and investors will bring their own financing cultures (and to an extent are already doing so) as well as influence domestic lenders and investors. They may be quicker to enforce or deploy loan-to-own strategies in situations where a traditional relationship bank or Nordic bondholder might have taken a different approach. As a result, Swedish documentation and restructuring protocols may increasingly align with international practices.
Swedish creditors begin to adapt
Swedish banks and institutional investors have closely observed the emergence of liability management exercises in Europe and the United States. They are acutely aware of the risk that some borrowers or issuers in cooperation with a friendly creditor group may use contractual loopholes either to “prime” incumbent creditors by exchanging old debt for contractually or structurally senior debt that effectively moves to the top of the capital structure, or to move assets into vehicles beyond the reach of current (super senior) creditors, which can then be used to secure more borrowing.
These concerns are shifting domestic creditor behavior. For example, Swedish-style Loan Market Association (LMA)-based intercreditor agreements used to be significantly shorter and simpler than equivalent English law documentation. They also lacked “evergreen” provisions and did not address issues such as debtor-in-possession financing or priming liens. However, they are now moving closer to the English law model, particularly where capital structures contain several layers of debt.
Swedish lenders providing super senior RCFs recognize that intercreditor provisions can be critical when financing comes under pressure. They have sharpened the focus on protecting their “sacred rights”—terms that require consent from all or a majority of the super senior RCF lenders (not just a majority of all creditors) to waive or amend such terms—when negotiating intercreditor agreements. However, these contractual protections (or contractual blocking terms) have not yet made their way into Nordic high yield bond terms generally. Consequently, creditors in a corporate bond are more exposed to aggressive liability management exercises than a lender under a traditional syndicated loan transaction. That said, there is an ongoing debate among investors in the Swedish high yield bond market regarding how best to address aggressive liability management exercises in connection with bondholder meetings.
The waiting game
To date, there have not been many situations where newer and more complex capital structures or aggressive liability management transactions have been subject to in-court restructuring proceedings or litigation in Swedish courts. Hence, there is insufficient case law to provide a clear steer on how Swedish courts may address intercreditor disputes. As a result, creditors and borrowers must continue to wait to see how a Swedish debt market with a more international hue will react and adjust when a borrower falls into deep distress.
There is, however, some case law indicating that courts may, in certain situations, impose an overarching duty of loyalty among contracting parties that affects how an agreement works in practice. This principle has yet to be applied in an intercreditor dispute. Courts may be reluctant to intervene when highly sophisticated parties, with broadly equal bargaining power, have negotiated a detailed intercreditor agreement based on LMA documentation and influenced by English law.
Against this backdrop, intercreditor issues have recently come under increased scrutiny from Swedish legal scholars and practitioners. The prevailing view is that, as a general rule, a bankruptcy trustee and an administrator in a company reorganization should observe a “waterfall” provision governing the distribution of recoveries from the debtor among creditors, provided that the provision was agreed to by the creditors and the debtor before the commencement of a Swedish bankruptcy or company reorganization proceeding.
These scenarios remain untested. Swedish courts may be influenced by established local market practice and how intercreditor arrangements governed by Swedish law are intended to work. But they could instead acknowledge that Sweden’s financing market cannot be allowed to operate separately from debt markets in the US, United Kingdom and other European Union countries, except in cases where mandatory Swedish law cannot be construed otherwise.
What has become clear is that, while it is unlikely that a substantial body of case law will emerge within the next few years, the market will change regardless, with a greater focus on documentation and long-term transition from a strictly Nordic-style restructuring approach to one that is more European and more international.