Copyright Page
© 2023 International Monetary Fund
SIP/2023/024
IMF Selected Issues Paper
European Department
Sweden's Corporate Vulnerabilities: A Focus on Commercial Real Estate Prepared by Svetlana Vtyurina and Rhiannon Sowerbutts
Authorized for distribution by Khaled Sakr
March 2023
IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries. It is based on the information available at the time it was completed on February 24, 2023. This paper is also published separately as IMF Country Report No 23/112.
ABSTRACT: 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 3/4 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.
RECOMMENDED CITATION: Svetlana Vtyurina and Rhiannon Sowerbutts. Sweden's Corporate Vulnerabilities: A Focus on Commercial Real Estate, Sweden. IMF Selected Issues Paper (SIP/2023/024). Washington, D.C.: Internationa Monetary Fund.
| JEL Classification Numbers: | D2, L, R3 |
| Keywords: | Sweden, Corporate Vulnerabilities, Commercial Real Estate, CRE, Real Estate Economics; Stress Test, Macroprudential Policy |
| Author's E-Mail Address: | SVtyurina@imf.org; rhiannon.sowerbutts@bankofengland.co.uk |
| JEL Classification Numbers: | D2, L, R3 |
| Keywords: | Sweden, Corporate Vulnerabilities, Commercial Real Estate, CRE, Real Estate Economics; Stress Test, Macroprudential Policy |
| Author's E-Mail Address: | SVtyurina@imf.org; rhiannon.sowerbutts@bankofengland.co.uk |
Front Page
SELECTED ISSUES PAPERS
Sweden's Corporate Vulnerabilities: A Focus on Commercial Real Estate
SWEDEN
Title Page
SWEDEN
SELECTED ISSUES
February 24, 2023
Approved By
European and Money and Capital Markets Department
Prepared By Svetlana Vtyurina (EUR) and Rhiannon Sowerbutts (FSAP external expert).
Contents
SWEDEN'S CORPORATE VULNERABILITIES: A FOCUS ON COMMERCIAL REAL ESTATE
A. Overview
B. Vulnerabilities and Contagion Risks
C. Stress Test
D. Policy Considerations
FIGURES
1. Selected CRE Indicators
2. Contagion in the CRE Sector
3. Credit Line Maturities
4. Cross-Ownership: Listed CRE Firms
5. Selected CRE Financial Ratios
6. CRE Stress Test Results