As inflation pressures ease and interest rate expectations stabilise, fixed income markets entered 2026 on firmer footing. The Nordic Outlook 2026 points to resilient regional growth, strengthening corporate balance sheets and record issuance in local bond markets.

In its January Nordic Outlook, economists at SEB project global GDP growth of just over 3% annually in both 2026 and 2027, supported by continued consumption and investment despite geopolitical tensions and structural challenges in key economies. The Nordic countries are seen as comparatively well positioned within this environment, with domestic demand and resilient labour markets providing support. While the U.S. Federal Reserve is expected to continue a gradual easing cycle, some Nordic central banks may keep rates steady, contributing to a more predictable rate environment for borrowers and investors.

Against this backdrop, asset managers also see constructive conditions for the region. Henrik Tingstorp, COO Fixed Income Fund Management at Simplicity Asset Management, expects the Nordic region to continue benefiting from relatively solid economic momentum, with Sweden acting as a key growth driver. “Lower interest rates and tax cuts are supporting households and are likely to stimulate private consumption,” he says. At the same time, he cautions that persistently high electricity prices could weigh on spending and delay parts of the recovery. “Overall, we believe Nordic companies are well positioned to perform in a strengthening economy, which provides support for the credit market.”

Balance Sheets Enter 2026 in Solid Shape

Corporate fundamentals appear broadly supportive. According to Nordic credit rating agency NCR, many Nordic companies have strengthened balance sheets and prioritised financial discipline in recent years, leaving them better positioned to benefit from a gradual recovery in demand. Improving consumer confidence, supported by wage growth and household savings buffers, as well as continued public and private investment in infrastructure, defence and technology, are seen as potential drivers for selected sectors in 2026.

NCR’s assessment suggests that sound financial positions and continued access to capital markets should underpin credit quality, although sector-specific developments may lead to greater dispersion across issuers.

Record Volumes and Active Primary Markets

Market data underline the constructive backdrop. According to the Nordic Trustee Corporate Bond Market Report 2025, the Nordic corporate bond market reached a record EUR 135 billion in outstanding volume last year, representing 12.4% year-on-year growth and surpassing the previous peak in 2021. New issuance totalled EUR 44 billion, up 12.8% compared to 2024, highlighting renewed primary market momentum.

Norway remains the dominant force in Nordic corporate credit, accounting for around 56% of total outstanding volume in 2025, followed by Sweden at 35%, while Denmark and Finland represent smaller shares of the regional market. Structurally, the market remains slightly tilted towards investment grade, with EUR 72 billion outstanding compared with EUR 63 billion in high yield, although the latter expanded at a faster pace during the year.

Within investment grade, Tingstorp sees selective opportunities emerging in the BBB segment as well as in higher rating categories, reflecting what he describes as attractive relative valuations. In high yield, spreads remain wider in the Nordics than in Europe and the US. “Combined with the generally strong financial position of Nordic companies, this continues to create favourable conditions for Nordic credit investments,” he says.

Structural Features Support the Case for Nordic Credit

For investors, the region’s structural characteristics remain a key differentiator. “What makes the Nordic credit market appealing is the diverse mix of companies across industries and ratings,” says Tingstorp. “The main attraction remains the attractive risk-return profile. Nordic issuers are generally smaller, which often translates into higher spreads compared to global peers.”

He also points to covenant structures that differ from broader European markets. “Many bonds include maintenance covenant — contractual clauses requiring issuers to meet ongoing financial ratios — which is less common in broader European credit markets,” Tingstorp notes, highlighting features that can provide additional downside protection in more volatile phases.

From a portfolio construction perspective, Nordic credit can complement global and investment grade allocations. “Given the region’s strong governance and resilient macro backdrop, it can also serve as an alternative to emerging market exposure,” he adds.

Risks and Dispersion Remain

Despite the supportive backdrop, risks have not disappeared. Geopolitical uncertainty, trade policy developments and shifts in global rate expectations could affect investor sentiment. At the issuer level, refinancing dynamics and sector-specific pressures may lead to greater dispersion in spreads, reinforcing the importance of credit selection. NCR also notes that a pick-up in merger and acquisition activity, while potentially supportive for growth, may introduce additional balance sheet considerations in some cases.

Market conditions at the start of the year reflect this balance between resilience and caution. “The credit market saw an active start to the year, with a steady flow of earnings reports and several new issues,” Tingstorp says. “The international market experienced some volatility, although overall movements in credit spreads were limited. The same pattern was observed in the Nordic market. However, spreads remain significantly higher and therefore continue to offer more attractive running yields.”

Overall, the Nordic Outlook for 2026 points to a credit market that begins the year from a position of relative strength, backed by solid fundamentals and active capital markets. At the same time, elevated spread levels and increasing dispersion suggest that outcomes will depend less on broad market direction and more on disciplined issuer selection and risk management.