In order to satiate investors' appetite for high yields in Finland, the state's exchange operator decided to open a new bond marketplace to sell junk bonds from smaller companies. Nasdaq OMX Helsinki had scheduled to open the bond marketplace next quarter on the First North platform. The platform would reportedly be a dedicated for trading of local small and medium-sized companies' debts. Moreover, the financial industry in Finland proposed to standardized the terms for credit instruments in order for smaller companies to enter easily into the fixed-income market.
Pohjola Bank Oyj debt capital markets unit head Timo Pietilae said, "Investor demand for bond issues based on high-yield documentation is growing. We've received strong signals that the market will develop and different actors will enter the markets in coming years. Recent initiatives to increase activity are very welcome." Pietilae was hopeful about small companies taking a shot at the market when the framework is operational.
Finnish Prime Minister Jyrki Katainen made a proposal that would allow SMEs to have access to financing easily to revive an already sluggish growth in Europe. The state of Finland is taking action to reduce bottlenecks in funding to aid companies making investments to the country, and in effect, create more jobs for its citizens. The government of Finland had struggled with the impact of two recessions within the last four years and a low gross domestic product figure.
Investors would be expecting to see bonds from privately-held companies as rates of central banks are at lows and sovereign bonds returns are at below inflation rates. According to data obtained by Bloomberg, Euro-area state bonds with maturities of over a year recorded a 2.8% return this year, while Finish debt with similar maturity terms recorded a 0.9% loss.
Citing a survey of institutional investors, senior adviser at the Helsinki-based Finance Ministry Urpo Hautala said, "The demand is there. Now the supply needs to be arranged and we're the midwives in this."
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