Selected Issues Papers

Sweden’s Corporate Vulnerabilities: A Focus on Commercial Real Estate: SWEDEN

Author/Editor:

Svetlana Vtyurina ; Rhiannon Sowerbutts

Publication Date:

March 21, 2023

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

Commercial Real Estate (CRE) debt constitute a large portion of corporate debt. Due to the funding structure this creates substantial risks for the financial system and the real economy, in general, due to broader spillover effects. Stress tests, conducted to assess the resilience of CRE sector, show that the median interest rate coverage would drop below one in a severe scenario, resulting in a ¾ of firms with debt-at-risk. CRE sector’s concentration, interconnectedness and insufficient disclosure of liabilities calls for close monitoring of liabilities structure and adjusting banks’ capital levels to better reflect current risks.

Series:

Selected Issues Paper No. 2023/024

Subject:

Bank credit Corporate sector Economic sectors Financial institutions Financial markets Financial sector policy and analysis International organization Lines of credit Monetary policy Money Securities markets Stress testing

Frequency:

Regular