The financing activity in the Norwegian market in 2024 has been positively affected by stable interest rates and inflation levels on a downward trajectory. The US, the EU and Sweden have started their planned interest rate cuts. Although the expectation at the start of the year was that the Norwegian Central Bank would cut interest rates in 2024, a strong labour market and a weak currency have resulted in zero interest rate cuts so far. Although this development is not as positive as markets expected, the economy has shown resilience and the financing markets have been active. Furthermore investors remain active in debt capital markets now that inflation seems to be under control and interest rates have stabilised.
As mentioned above, the Norwegian high yield market has been exceptionally strong with a large number of issuances and a high issue volume in 2024. This continued a trend which started in 2023, and which was strengthened by the stabilising of interest rates and inflation. The market has been open to both repeat issuers and new issuers, and across most industries. The year has also ended on a strong note, which shows a potential for continued strong activity at the beginning of 2025.
The bank lending market has generally been active in 2024, although certain sectors, such as real estate, continue to struggle. Several banks remain unwilling to provide loans to «brown» activities such as oil and gas, but energy companies not focusing on renewable energy are still able to obtain financing in the bond market and from certain international banks and funds. The pivot from a focus on green and renewable energy to energy security has profited energy companies that have not yet invested in renewable energy. Renewable energy companies have struggled with low profitability due to increased competition and costs.
The shipping sector continued its strong performance and has experienced a high number of transactions throughout the year. Banks continue to be willing to lend to the sector, although some large shipping companies experience a level of profitability implying they do not need additional debt financing. The bond market has also been active within the shipping sector.
The financing of the green shift remains a hot topic, although the renewable sector has been negatively affected by low energy prices and increased construction and production costs. We expected an increased number of project finance transactions in 2024 as part of the green shift, but that has not yet fully materialised. We do however expect the focus on green energy to continue and grow stronger as countries and companies continue their search for alternative and green energy sources. Construction of offshore wind parks are also likely to be initiated, although the timing of these projects is unclear.
2024 has been an active year where uncertainty related to inflation and interest rates no longer dominate the headlines. Next year promises to be the year when the Norwegian Central Bank starts its interest rate cuts, which may lead to increased activity for all sectors and potentially also a stronger real estate market. However, not all is positive in the financial markets. There is uncertainty surrounding the new US president, partly due to promises of increased tariffs, and geopolitical unrest is at a historically high level. These factors could have a negative impact on the economic outlook and lead to lower activity. Nevertheless, we are optimistic and are keeping our fingers crossed for an active 2025.
We would like to thank all our clients and counterparties for excellent collaboration throughout 2024 and look forward to reconnecting in 2025.