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

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.
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Volume/Issue: Volume 2023 Issue 024
Publication date: March 2023
ISBN: 9798400235962
$15.00
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Topics covered in this book

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Finance , Money and Monetary Policy , International - Economics , Sweden , Corporate Vulnerabilities , Commercial Real Estate , CRE , Real Estate Economics , Stress Test , Macroprudential Policy , CRE stress test result , CRE firm , CRE indicator , CRE sector , credit line maturity , Stress testing , Lines of credit , Corporate sector , Securities markets , Bank credit , Global

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.