Debt capital markets in Sweden: regulatory overview

A Q&A guide to debt capital markets law in Sweden.

The Q&A gives an overview of main debt markets/exchanges, regulators and legislation, listing requirements, offering structures, advisers, prospectus/offer document, timetables, tax, clearing and settlement, continuing obligations and reform.

To compare answers across multiple jurisdictions visit the Debt capital markets country Q&A tool.

This Q&A is part of the multi-jurisdictional guide to capital markets law. For a full list of jurisdictional Q&As visit www.practicallaw.com/capitalmarkets-mjg.

Mattias Lampe and Rasmus Fahlén, Mannheimer Swartling Advokatbyrå
Contents

Legislative restrictions on selling debt securities

1. What are the main restrictions on offering and selling debt securities in your jurisdiction?

Main restrictions on offering and selling debt securities

The main restrictions are found in the Financial Instruments Trading Act (lagen om handel med finansiella instrument) which implements Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading (Prospectus Directive) and Directive 2010/73/EU amending Directives 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market (Amendment Directive).

Restrictions for offers to the public or professional investors

Debt securities are classified as either retail debt securities, if the nominal amount of each debt security is less than EUR100,000 (or the equivalent in any other currency), or wholesale debt securities, if the nominal amount of each debt security is EUR100,000 or above (or the equivalent in any other currency) (see also Question 3). For retail debt securities, the issuer is required to prepare an EU prospectus if an offer is made to the public (subject to certain exemptions). A prospectus is typically also required if debt securities (including wholesale securities) are listed on an EU regulated market.

 

Market activity and deals

2. Outline the main market activity and deals in your jurisdiction in the past year.

The Swedish bond market is continuously maturing. For corporates, the market has now been an alternative to bank funding for half a decade. Senior unsecured and secured deals with a deal size spanning from SEK300 million to SEK800 million have been most common but the market now sees a turn towards bigger tickets and more structured deals. Sponsors are striving to come to market with portfolio companies for senior bond financing accompanied with a super senior RCF, as well as covenants and security packages very much like in US HY bond deals. Despite the recent substantial downturn in the number of deals in Norway, the Swedish bond market has continued to function. Property and infrastructure companies as well as listed companies have together formed the core supply drivers in the market. The number of unrated deals is continuing to be substantial.

 

Structuring a debt securities issue

3. Are different structures used for debt securities issues to the public (retail issues) and issues to professional investors (wholesale issues)?

Debt securities are divided into those designated for the wholesale market and those designated for the retail market. The application of the EU prospectus rules and continuing obligations for debt securities admitted to trading will depend on whether the debt securities are retail or wholesale:

  • Retail. The retail debt regime applies if the nominal amount of each debt security is less than EUR100,000 (or the equivalent in any other currency).

  • Wholesale. The wholesale debt regime applies if the nominal amount of each debt security is EUR100,000 or above (or the equivalent in any other currency).

For retail debt securities, an EU prospectus must be prepared if an offer to the public is made (subject to certain exemptions). This means that the deal execution time until settlement will be longer compared to the case where no prospectus must be prepared.

As a result, the issuance of debt securities in Sweden is most often made under the wholesale regime. For wholesale debt securities, there is no requirement to prepare an EU prospectus when an offer to the public is made. Instead, a prospectus can be prepared at a later stage in conjunction with the admission to trading. Moreover, the requirements for wholesale prospectuses are less onerous than those applicable to retail prospectuses.

 
4. Are trust structures used for issues of debt securities in your jurisdiction? If not, what are the main ways of structuring issues of debt securities in the debt capital markets/exchanges?

Swedish law does not acknowledge the common law concept of trusts. Historically, issuing agents (assisting the issuer in connection with the issue) have to an extent represented bondholders in matters relating to the debt securities. However, there are currently two independent providers of agency services on the Swedish market (CorpNordic and Nordic Trustee & Agency). Under most terms and conditions of stand-alone debt securities, an independent agent will represent the bondholders in matters relating to the securities and hold any transaction security on behalf of the bondholders. The role of the agent is not regulated by law but is purely a contractual arrangement.

 

Main debt capital markets/exchanges

5. What are the main debt securities markets/exchanges in your jurisdiction (including any exchange-regulated market or multi-lateral trading facility (MTF))?

Main debt markets/exchanges

Debt securities are primarily admitted to trading on the exchanges of Nasdaq Stockholm, which belongs to the Nasdaq Group. Nasdaq Stockholm operates two debt markets:

  • The regulated market of Nasdaq Stockholm. This is the flagship debt securities market in Sweden. Nasdaq Stockholm is an EU regulated market and, accordingly, its listing requirements are based on the applicable European standards (www.nasdaqomxnordic.com).

  • First North Bond Market. This market was launched at the end of 2012 and is a multilateral trading facility (MTF) under EU legislation with less onerous requirements and rules compared to those applicable for EU regulated markets (www.nasdaqomxnordic.com/firstnorth).

In addition to the exchanges of Nasdaq Stockholm, there are two other Swedish alternatives:

  • Nordic Derivatives Exchange (NDX). The exchange is operated by Nordic Growth Market, and constitutes an EU regulated market subject to the same European listing requirements as Nasdaq Stockholm (www.ndx.se).

  • RänteTorget. The exchange is operated by AktieTorget. It was launched in early 2013 and constitutes an MTF (www.rantetorget.se).

Approximate total issuance on each market

According to Nasdaq Stockholm, during 2014 a total of 282 issues of corporate bonds were admitted to trading on its regulated market (of which 47 new issuers issued 79 bonds), an increase from 2013 when 218 corporate bonds were admitted to trading. The aggregate value of the issues during 2014 was SEK130.3 billion.

 
6. What legislation applies to the debt securities markets/exchanges in your jurisdiction? Who are the main regulators of the debt capital markets?

Regulatory bodies

The Swedish Financial Supervisory Authority (SFSA) is the competent authority in Sweden for the purposes of Directive 2004/39/EC on markets in financial instruments (MiFID) and operates in four main areas:

  • Supervision.

  • Regulation.

  • Licences.

  • Applications.

One of the SFSA's key roles is to supervise and monitor companies operating in the Swedish financial markets. The SFSA is also authorised to issue regulations and guidelines relating to the Swedish financial markets. Companies offering financial services in Sweden generally require an SFSA licence.

Legislative framework

The principal pieces of legislation through which Sweden has implemented the EU Directives relating to admission to trading on a regulated market and offers of securities to the public are:

  • The Securities Market Act (lagen om värdepappersmarknaden).

  • The Financial Instruments Trading Act.

In addition, debt security issues may have to comply with:

  • The Swedish Companies Act (aktiebolagslagen).

  • The SFSA Regulations (2007:17) on Operations on Trading Venues (Finansinspektionens föreskrifter om verksamhet på marknadsplatser).

  • The Covered Bonds Act (lagen om utgiving av säkerställda obligationer).

  • The rules of the relevant exchange (for example, the Rulebook for Issuers of Nasdaq Stockholm).

 

Listing debt securities

7. What are the main listing requirements for bonds and notes issued under programmes?

Main requirements

Nasdaq Stockholm. There are no direct requirements for jurisdictional domicile or even type of corporate identity for the issuer. However, the issuer must be duly incorporated under the relevant laws and regulations of its jurisdiction of incorporation. If the issuer is a Swedish limited liability company (aktiebolag), it must be a public company and have a share capital of at least SEK500,000 (or the equivalent amount in euros). Further, the issuer must prepare an EU prospectus and have it approved by the SFSA (or such other regulatory authority as may be relevant). It is also a condition for listing that the issuer has routines and systems in place for the dissemination of required information. The debt securities must be freely transferable and affiliated with a Central Securities Depository (typically Euroclear Sweden). All debt instruments that form part of an issue must be admitted to trading.

First North Bond Market. First North Bond Market applies listing requirements similar to those of Nasdaq Stockholm. As First North Bond Market's regulatory status is that of an MTF, issuers are not obliged to prepare a prospectus and have it approved by the SFSA (or other relevant authority). The issuer may instead prepare and provide a company description in accordance with the requirements of First North Bond Market. The issuer must also appoint a certified adviser. The certified adviser must ensure compliance and advise, support and update the issuer on its listing obligations.

Nordic Derivatives Exchange. Being a regulated market, NDX applies listing requirements similar to those of Nasdaq Stockholm.

RänteTorget. RänteTorget applies listing requirements similar to those of First North Bond Market.

Minimum size requirements

Nasdaq Stockholm. The total nominal amount of the debt securities admitted to trading must not be less than SEK2 million (or the equivalent in any other currency). However, no minimum size requirement applies for convertible bonds.

First North Bond Market. The same requirements apply as for Nasdaq Stockholm.

Nordic Derivatives Exchange. The same requirements apply as for Nasdaq Stockholm.

RänteTorget. The total nominal amount of the debt securities admitted to trading must not be less than the equivalent of SEK444,000.

Trading record and accounts

Nasdaq Stockholm. The issuer must have published annual accounts for at least three years in accordance with the laws and accounting standards applicable to the issuer (typically, the International Financial Reporting Standards (IFRS)). There must also be consolidated accounts if the issuer has any subsidiaries. An issuer can seek to obtain an exemption from the requirement for trading records and accounts provided that there is sufficient information in order for investors and the exchange to make an informed evaluation of the issuer and its debt securities.

First North Bond Market. No general requirements regarding trading records and accounts apply.

Nordic Derivatives Exchange. The issuer must provide NDX with annual reports, audit reports or the equivalent information for the preceding three financial years, together with any interim reports in respect of the period after the latest annual report.

RänteTorget. The issuer must provide RänteTorget with annual accounts for the two most recent financial years (or such shorter time that the issuer has been in existence).

Minimum denomination

Nasdaq Stockholm. Apart from debt securities admitted to trading on the list for Tailor Made Products, there are no requirements for minimum denominations. Debt securities admitted to trading on the Tailor Made Products list must be issued in subscription lots of not less than SEK100,000 and trading lots of not less than SEK50,000 (or the equivalent in any other currency).

First North Bond Market. No minimum denomination requirement applies. If no other EU prospectus exemption is available to the issuer, it may be advisable to issue denominations of EUR100,000 (or the equivalent in any other currency) or above in order to avoid preparing a prospectus for the offering of the debt securities.

Nordic Derivatives Exchange. No minimum denomination requirement applies.

RänteTorget. No minimum denomination requirement applies. However, the debt securities must be held by at least 100 holders, each holding at least 10% of the price base amount (prisbasbelopp) in nominal value (that is, SEK4,450 for 2015).

 
8. Are there different/additional listing requirements for other types of securities?

Nasdaq Stockholm

Nasdaq Stockholm maintains six lists for debt securities: Structured Products, Retail Bonds, Tailor Made Products, Convertible Bonds, Corporate Bonds and Benchmarks:

  • Market making. The trading in debt securities admitted to trading on the lists for Structured Products, Retail Bonds and Tailor Made Products must be supported by a market maker. The market maker may be either the issuer or a member affiliated with the exchange.

  • Prospectus content. This will depend on the type of debt security that is to be admitted to trading and therefore which category from the six lists the admission to trading falls into.

  • Minimum denomination. Debt securities admitted to trading on the list for Tailor Made Products must be issued in subscription lots of not less than SEK100,000 and trading lots not less than SEK50,000 (or the equivalent in any other currency). No minimum denomination requirement applies for the other lists of Nasdaq Stockholm.

  • Requirement for listed shares. Debt securities can only be admitted to trading on the list for Convertible Bonds if the shares in the issuer are also admitted to trading at an internationally known regulated market.

In addition, Nasdaq Stockholm can reject an application for admission to trading even though all listing requirements are met by the issuer if it would be detrimental to the securities market or investor interests to grant an application. Nasdaq Stockholm can also require that the issuer publish additional information on its webpage if that information is important and of interest to investors.

First North Bond Market

The exchange can impose any special eligibility requirement on the issuer which it deems appropriate in order to protect investors and the market's reputation. Despite an applicant satisfying all listing requirements, the exchange can reject an application if it concludes that admission to trading could damage public confidence in the exchange or the securities market.

Nordic Derivatives Exchange

For instruments other than bonds, listing can only be granted if there is a significant amount of trading with accurate price setting in the underlying assets.

RänteTorget

There are no different or additional listing requirements for other types of securities.

 

Continuing obligations: debt securities

9. What are the main areas of continuing obligations applicable to companies with listed debt securities and the legislation that applies?

The key continuing obligations applicable to listed companies relate to:

  • Disclosure rules.

  • Insider rules.

  • Insider list.

Disclosure rules

An issuer of listed debt securities must disclose information about decisions or other facts and circumstances which are "price sensitive". The concept of what is "price sensitive" is evaluated on a case-by-case basis. It is believed that the following factors should be taken into account when determining what information is "price sensitive":

  • The expected extent or importance of the decision, fact or circumstance compared to the issuer's activities as a whole.

  • The relevance of the information as regards the main determinants of the price of the debt securities.

  • All other market variables that may affect the price of the debt securities.

Since the overriding principle is that all market participants should have simultaneous access to any price sensitive information about the issuer of listed debt securities, all price sensitive information concerning the issuer must be disclosed by press release as soon as possible (delayed disclosure is only permitted in certain circumstances). The issuer must also ensure that the information is treated confidentially prior to its disclosure and that no unauthorised party is given that information prior to public disclosure. As a consequence, price sensitive information cannot be disclosed to analysts, journalists or any other parties, either individually or in groups, unless that information is simultaneously made public to the market.

Selective disclosure of price sensitive information is only permitted in special cases (for example, concerning information to major or contemplated shareholders or bondholders in conjunction with an analysis prior to a planned securities issue, or to advisers or to the issuer's lenders prior to significant credit decisions).

Further, an issuer of listed debt securities must prepare and disclose all financial reports under the accounting legislation and regulations applicable to the issuer. The issuer must disclose annual financial statements and release interim reports at least once every six months. For issuers of debt securities admitted to trading on RänteTorget, interim reports must be released in respect of each financial quarter. Interim reports must be released within two months from the end of each relevant period.

Insider rules

Rules relating to prohibitions on insider trading, unlawful disclosure of insider information and market manipulation are set out in the Market Abuse Act (lag om straff för marknadsmissbruk vid handel med finansiella instrument).

The Market Abuse Act prohibits any person who has received insider information from:

  • Acquiring or selling the financial instruments to which the information relates.

  • Advising or in any other manner causing any third party to acquire or sell those financial instruments.

Notably, the insider rules extend to certain over the counter trading and as a result the rules may apply regardless of any listing of the financial instruments.

There are a number of exemptions to the insider rules (for example, that financial instruments may be acquired where the insider information is expected to have a negative impact on the price of the instrument and vice versa).

The Market Abuse Act also prohibits any person from intentionally disclosing information which they realise, or should have realised, constitutes insider information, unless the disclosure occurs as a normal part of the performance of a service, activity or obligation, or where the information is placed into the public domain concurrently with its disclosure.

Furthermore, the Market Abuse Act prohibits any person, either in conjunction with trading on the securities market or otherwise, from acting in a manner which they realise, or should have realised, is likely to manipulate the market price or other terms and conditions in respect of trading in financial instruments, or otherwise mislead purchasers or sellers of such instruments.

Non-compliance with these rules is a criminal offence that can lead to imprisonment for up to four years.

Insider list

A Swedish limited liability company issuer with debt securities admitted to trading on a regulated market must maintain a list of persons working for it who have access to insider/price sensitive information relating to the issuer (known as a logbook). The list does not have to be made public, but must be presented to the SFSA upon request.

 
10. Do the continuing obligations apply to foreign companies with listed debt securities?

An issuer of debt securities admitted to trading on one of the Swedish exchanges will be subject to the disclosure rules (see Question 9). The insider rules will also apply for acts and omissions occurring under the jurisdiction of Sweden (see Question 9). However, the obligation to keep an insider list (see Question 9) only applies to Swedish limited liability companies.

 
11. What are the penalties for breaching the continuing obligations?

A breach of the issuer's continuing obligations can lead to fines being imposed by the SFSA and sanctions being imposed by the exchange. The sanctions range from a de-listing to fines or a warning. Certain violations of the rules on insider trading can also attract criminal liability (see Question 9).

 

Advisers and documents: debt securities issue

12. Outline the role of advisers used and main documents produced when issuing and listing debt securities.

Arranger

Investment banks or other financial institutions typically act as arrangers for the issuance of debt securities. The arranger is in charge of structuring the transaction and arranges the sale of the debt securities to investors. The arranger seldom subscribes for or underwrites the issuance of debt securities. Instead, the debt securities are sold on a "best efforts" basis.

Lawyers

Lawyers advise, among others, the issuer and the arranger/dealers. They advise on the preparation for the offering and listing of the debt securities, perform legal due diligence and draft and negotiate the transaction documents (term sheet, terms and conditions of the bonds, intercreditor agreement, security documents, agency agreement, subscription/dealer agreement, and so on). Lawyers also assist with the preparation of the disclosure documentation and the prospectus.

Agent

The agent represents the bondholders and holds any transaction security on behalf of the bondholders (see Question 4).

Auditors

The issuer's auditors may be engaged to verify the issuer's accounts as reproduced in the prospectus or other offering material, and provide a comfort letter in respect of that information.

Central Securities Depositary

Paying agents (or their equivalents) are not common in Sweden. Payments to bondholders or their nominees will be effected by the Central Securities Depositary (normally Euroclear Sweden). The issuer is usually responsible for instructing the Central Securities Depositary on payments to the bondholders.

Main documents

The main documents for a debt securities issue are the terms and conditions of the bonds, the agency agreement and the prospectus. Depending on the structure, there may also be security documents and inter-creditor arrangements. There is normally also a subscription/dealer agreement between the issuer and the dealer(s).

 

Debt prospectus/main offering document

13. When is a prospectus (or other main offering document) required? What are the main publication/delivery requirements?

The circumstances in which an issuer will be required to prepare a prospectus under Swedish law are essentially those set out in Article 3 of Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading (Prospectus Directive): the "public offer" and "admission to trading" triggers.

The SFSA must approve a prospectus before its publication (provided that Sweden is the relevant home member state). The SFSA will grant its approval if the prospectus is complete, consistent, comprehensible and meets all formal requirements set out in the Financial Instruments Trading Act and Regulation (EC) 809/2004 implementing Directive 2003/71/EC as regards prospectuses and dissemination of advertisements (Prospectuses Regulation).

The Financial Instruments Trading Act provides that the SFSA must approve a prospectus within ten business days of its receipt of a complete application. However, if an offer to the public relates to debt securities issued by an issuer which has not previously offered transferable securities to the public, and which has not previously had transferable securities admitted to trading on a regulated market, the SFSA will have 20 business days from receipt of a complete application to approve a prospectus.

A prospectus must be made public by the issuer when the prospectus has been approved and registered by the SFSA. Publication must be made as soon as possible and not later than the day before the day on which either:

  • The application period under which the offer commences.

  • The debt securities are admitted to trading.

Publication of the prospectus is normally made by making it available on the issuer's and the participating bank(s) website. The SFSA also makes the prospectus available on its website.

It is a condition for an admission to trading on First North Bond Market that the exchange receives a company description or a prospectus. The company description is not subject to approval by any authority.

 
14. Are there any exemptions from the requirements for publication/delivery of a prospectus (or other main offering document)?

The circumstances in which a prospectus will be required are qualified by a series of exemptions. The SFSA has no discretion under the Prospectus Directive in this area, and, accordingly, the exemptions under Swedish law to the requirement to publish a prospectus are essentially those laid down in Articles 3.2 and 4 of the Prospectus Directive.

Exemptions therefore apply in relation to:

  • Public offers.

  • Admission to trading.

Public offers

Key exemptions include where:

  • The offer is directed solely to qualified investors.

  • The offer is directed to fewer than 150 natural persons or legal entities who are not qualified investors in a country within the EEA.

  • The offer relates to a purchase of debt securities for a sum equivalent to not less than EUR100,000 for each investor.

  • Each of the debt securities has a nominal value equivalent to not less than EUR100,000.

  • The aggregate sum which the investors will pay during a 12-month period within the EEA does not exceed the equivalent of EUR2.5 million.

The above exemptions can be combined and foreign issuers can apply them in the same way as domestic issuers.

Admission to trading

The key exemptions from the prospectus requirement where transferable securities are admitted to trading include the following:

  • Where debt securities are offered as consideration in a takeover bid.

  • Where debt securities are offered or allotted to present or former employees or board members of the issuer.

  • Where debt securities of the same category have been admitted to trading on another regulated market for more than 18 months.

An issuer applying for admission to trading on First North Bond Market will not be required to prepare a company description if it is required by law to publish a prospectus, or where sufficient information is already available to the market.

 
15. What are the main content/disclosure requirements for a prospectus (or other main offering document)? What main categories of information are included?

As is the case in all jurisdictions in which the Prospectus Directive and Prospectus Regulation apply, the overriding obligation of disclosure in a prospectus is to provide "all information regarding the issuer and the transferable securities that is necessary to enable an investor to make an informed assessment of the assets and liabilities, financial position, results, and future prospects of the issuer and of any guarantor, as well as of the transferable securities". Furthermore, the information must be written in such a way that it is easy to understand and analyse.

The "necessary information" must be prepared having regard to the particular nature of the transferable securities and their issuer. More detailed provisions regarding the information which must be included in a prospectus are set out in the Prospectus Regulation.

Although one might expect the final price or the number of transferable securities to be considered part of the "necessary information", applicants are allowed to omit these details from a prospectus (for example, where the company intends to approach retail investors to discover the level of interest in a particular issue before determining these elements). However, in these circumstances, the prospectus must instead contain information regarding the criteria or conditions which will be applied to fix the price (or, if applicable, the ceiling price) and the number of transferable securities to be offered. If it does not present this information, investors who have accepted offers to purchase or subscribe will be entitled to withdraw their acceptances within five business days of publication of the final fixed price and number of transferable securities.

In certain instances, the SFSA (like other competent authorities in Europe) has the power to grant derogations from the duty of disclosure. The SFSA can do this where it finds that:

  • The publication of the information would be seriously detrimental to the issuer and the omission of the information would not mislead the public.

  • The information is of minor importance and would not influence the assessment of the financial position and prospects of the issuer or any guarantor.

The SFSA can also permit issuers to omit information required under the Prospectus Regulation in instances where it determines that such information is not relevant to the issuer's line of business or legal form, or to the relevant transferable securities (where possible, the prospectus will contain comparable information instead).

The detailed content and disclosure requirements depend on, among other things, whether the debt securities are in retail or wholesale denominations and on the nature of the issuer. In addition to the statutory requirements, Swedish market practice determines the content, format and structure of the prospectus. The main categories of information usually included in a wholesale prospectus are:

  • Risk factors.

  • Overview of the debt securities.

  • Information about the issuer and the industry in which it operates.

  • Information about the debt securities.

  • Information about the board of directors, senior management and auditors.

  • Supplementary information, for example, material agreements and legal proceedings.

  • The terms and conditions of the debt securities.

  • Financial information incorporated by reference.

Generally, the prospectus will be prepared in Swedish. However, a prospectus may be prepared in English in certain circumstances. For example, a prospectus may always be prepared in English if it relates to debt securities and the nominal amount of each debt security is EUR100,000 or above (or the equivalent in any other currency). A prospectus may also be prepared in English if the person preparing the prospectus has elected Sweden as home membership state in respect of debt securities that will be offered to the public or admitted to trading in Sweden, and the nominal amount of each debt security is EUR1,000 or above (or the equivalent in any other currency). The SFSA may also permit that a prospectus be prepared in English in other circumstances. In each case the SFSA may require a Swedish translation of the summary chapter (if required) in the prospectus.

For debt securities, the prospectus may be prepared as one or several documents. The prospectus is prepared as one complete document in the case of stand-alone issues, while it is prepared in the form of a base prospectus for debt securities programmes. The base prospectus will contain all information about the issuer and the general information relating to the debt securities (for example, the terms and conditions of the debt securities along with a format for the final terms). The final terms will be submitted to the SFSA once an issue has been made under the programme, although the final terms are not subject to any SFSA approval.

The requirements for a company description under the First North Bond Market rulebook are similar to those for prospectuses.

 
16. Who is responsible for the prospectus (or other main offering document) and/or who is liable for its contents?

For prospectuses prepared in respect of securities issued by Swedish limited liability company issuers, the board of directors is responsible under the Companies Act for the content of the prospectus. The prospectus must contain a declaration by the board that, having taken all reasonable care to ensure that such is the case, the information contained in the prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its substance. For prospectuses relating to debt securities, it is customary that the issuing company accepts responsibility alongside the board by an express statement to this effect in the prospectus.

Besides the prospectus liability in relation to investors, non-compliance with the rules on prospectuses can result in the SFSA imposing a penalty on the issuer in an amount between SEK50,000 and SEK10 million.

The rules for prospectus liability are expected to change. In a legislative proposal published in March 2013 it has been proposed that board members' direct liability for debt security prospectuses should be abolished and, instead, that such liability be borne by the issuer who is responsible for the debt security prospectus. It is however at present uncertain if and when the proposal will result in any legislative changes.

The responsibility for a company description for the purpose of admission to trading on First North Bond Market lies with the issuer's board of directors.

 

Timetable: debt securities issue

17. What is a typical timetable for issuing and listing debt securities?

The timetable varies between a week and several months depending on various factors, including the type of issuance, structuring, if the issuer has issued any other securities and if the debt securities are issued stand-alone or under a programme. A timetable for an issue of stand-alone wholesale denominated debt securities to be admitted to trading on a regulated market would typically include the following steps, where "T" means the day of settling the debt securities issue:

  • T minus 4 weeks to 2 months. One or several arranging banks are mandated together with legal counsel and an agent for the bondholders.

  • T minus 4 weeks to 2 months. A term sheet is prepared, appropriate due diligence performed and presentation materials prepared. A draft prospectus will often be prepared along with other transaction documents if the debt securities are intended to be listed on a regulated market.

  • T minus 2 weeks to 1 month. The offering is pre-sounded with anchor investors (and transaction documents sometimes modified based on the investor feedback).

  • T minus 1 week to 1 month. The offering is presented to investors based on the term sheet or full terms and conditions, together with a draft prospectus which has been reviewed but not yet formally approved by the SFSA. Bookbuilding commences.

  • T minus 5 business days. The transaction documents are signed and investors commit to subscribing for the debt securities.

  • T. Settlement occurs: the debt securities are created and booked to securities accounts and the issue proceeds are paid to the issuer.

  • T plus 1 business day to 3 months. The prospectus is approved by the SFSA and the debt securities are admitted to trading on the regulated market.

 

Tax: debt securities issue

18. What are the main tax issues when issuing and listing debt securities?

Non-resident investors are generally not taxable in Sweden in respect of debt securities provided that the investor does not have a permanent establishment in Sweden to which the debt securities are effectively connected. Under Swedish law no withholding tax is imposed on interest and no stamp duty or similar fees are payable on the issues or transfers of debt instruments.

For tax residents in Sweden interest is taxable. For tax resident individuals and estates of deceased persons a preliminary tax, at present 30%, of paid interest will be withheld by Euroclear Sweden.

Under Swedish law, the right to deduct interest is limited in some cases. However, the rules generally only apply to intra-group loans. At this stage, there are no plans to introduce the financial transaction tax that is to be introduced in certain EU member states.

 

Clearing and settlement of debt securities

19. How are debt securities cleared and settled and what currency are debt securities typically issued in? Are there special considerations for holding, clearing and settling debt securities issued in foreign currencies?

In Sweden, debt securities which are to be admitted to trading on a regulated market or MTF will be issued in dematerialised book-entry form. The debt securities are registered on behalf of each bondholder or its nominee in accordance with the Swedish Financial Instruments Accounts Act (lagen om kontoföring av finansiella instrument). No physical notes or global note(s) are issued.

The debt securities are cleared and settled through Euroclear Sweden and its VPC system. The issuer and the issued debt securities must be affiliated with Euroclear Sweden. A bondholder, or its nominee, must hold a securities account on which the debt securities are registered.

The VPC system only accepts debt securities denominated in Swedish kronor (SEK) and euro (EUR).

 

Reform

20. Are there any proposals for reform of debt capital markets/exchanges? Are these proposals likely to come into force and, if so, when?

The debate in Sweden regarding the liquidity of listed debt securities and the related question of post-trade disclosure of prices and volumes has resulted in revised regulations from the SFSA. Starting from 2 February 2015, information on transactions in corporate bonds must be disclosed no later than 9 am on the following trading day. The SFSA can grant exemptions for particular transactions in excess of SEK50 million.

During 2013, the Swedish Securities Dealers Association published its template terms and conditions for Swedish high-yield debt securities. These will be updated for the first time in 2015. Mannheimer Swartling is legal adviser to the Swedish Securities Dealers Association for the project.

 

Online resources

Sweden Parliament (Riksdag)

W www.riksdagen.se/sv/Dokument-Lagar/

Description. The official website of the Swedish parliament (Riksdag) publishes all laws and ordinances in force, in the original Swedish language.

Government Offices of Sweden

W www.government.se/sb/d/3288

Description. The official website of the Government Offices of Sweden (Regeringskansliet) publishes unofficial translations of certain laws and ordinances, translated by Swedish ministries and government agencies.

Swedish Financial Supervisory Authority

W www.fi.se/Regler/FIs-forfattningar/

Description. The official website of the Swedish Financial Supervisory Authority publishes the regulatory code adopted by the Swedish Financial Supervisory Authority.



Contributor profiles

Mattias Lampe, Partner

Mannheimer Swartling Advokatbyrå

T +46 8 595 064 74
F +46 8 595 060 01
E mat@msa.se
W www.mannheimerswartling.se

Professional qualifications. LL.M, Cambridge University, 1997; LL.M, Uppsala University, 1995

Areas of practice. Mattias Lampe is specialised in the area of debt capital markets and finance. He works predominantly with bond issues, securitisation and other asset-backed financing, financing of financial institutions and financial regulation.

Professional associations/memberships

  • Swedish Bar Association, 2002

  • Board of Nordic Capital Markets Forum

  • Research Panel for Financial Markets Law, Stockholm Centre for Commercial Law, Stockholm University

  • Policy Group for Financial Services and Insurance, ICC Sweden

Recent transactions

  • Acted for Santander Consumer Bank on its SEK4.5 billion term securitisation of Swedish auto loans.

  • Acted for Länsförsäkringar Bank on its issue of SEK1.1 billion Tier 2 subordinated callable notes listed on the Nasdaq Stockholm exchange.

  • Acted for Hufvudstaden AB on its establishment of a SEK2 billion medium term note programme and its debut issues under the programme.

  • Acted for Nordax Finans on its SEK1.9 billion term securitisation of Swedish unsecured consumer loans, and its NOK1.2 billion term securitisation of Norwegian unsecured consumer loans.

  • Acts for a number of Nordic financial institutions and corporates on their international and domestic funding programmes, ranging from covered bonds to structured products and subordinated debt.

Rasmus Fahlén, Senior Associate

Mannheimer Swartling Advokatbyrå

T +46 8 595 060 41
F +46 8 595 060 01
Eraf@msa.se
W www.mannheimerswartling.se

Professional qualifications. LL.M, Stockholm University, 2009

Areas of practice. Debt capital markets; finance.

Professional associations/memberships. Swedish Bar Association, 2013

Recent transactions

  • Acted for Hemsö Fastighets AB in connection with its establishment of a SEK6 billion medium term note programme.

  • Acted for DDM Treasury Sweden AB in connection with its issue and listing of SEK500 million senior secured bonds and its issue of SEK55 million subordinated bonds.

  • Acted for Klövern AB in connection with its SEK700 million mortgage backed bond issue.

  • Acted for Hemsö Fastighets AB in connection with its SEK750 million bond issue.

  • Acted for Swedish Orphan Biovitrum AB (SOBI) in connection with its SEK600 million and SEK200 million bond issues.

  • Acted for Kungsleden AB in connection with its SEK600 million bond issues.

  • Acted for JSM Financial Group AB in connection with its SEK350 million bond issue.

  • Acted for the MCB group in connection with its SEK500 million senior bonds backed by Baltic and Finnish consumer loans and SEK45 million unsecured subordinated bonds.

  • Acted for Nordax Finans on its SEK1.931 billion term securitisation of Swedish unsecured consumer loans.

  • Acted for Cidron Delfi Intressenter AB (within the Orc Software Group) in connection with its EUR60 million corporate bonds with shared security.

  • Acted for the Joint Bookrunners in connection with Victoria Park AB's SEK400 million bond issue.

  • Acts for a number of Nordic financial institutions and corporates on their international and domestic funding programmes, ranging from covered bonds to structured products and subordinated debt.


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