Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Scope performs monitoring reviews to determine whether outstanding ratings remain proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly-rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the Kingdom of Sweden (AAA/Stable; S-1+/Stable) on 19 May 2021. The review resulted in no action on the assigned ratings. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

Key rating factors

Sweden’s long-term ratings of AAA/Stable are underpinned by the following credit strengths: i) the country’s wealthy and diversified economy, ii) a strong fiscal framework and low level of public debt, iii) current-account surpluses, and iv) a strong institutional framework and stable governance, including strengthening of institutions tasked with financial-system governance. These factors increase the country’s resilience to economic shocks and ensure the government has the fiscal space to enact countercyclical fiscal policies. Challenges relate to: i) ongoing imbalances in financial-asset markets, exacerbated by global accommodative monetary policies, and ii) high and rising levels of household and corporate debt as well as banks’ significant short-term external debt.

The Stable Outlook reflects Scope’s view that risks to the ratings over the next 12 to 18 months are balanced. The ratings/Outlooks could be downgraded if, individually or collectively: i) a sharp correction in the Swedish housing market significantly damaged economic recovery, and impaired household and banking system balance sheets, ii) Sweden’s fiscal framework and/or fiscal dynamics were to deteriorate, resulting in further material increase of government debt, and/or iii) a deepened global or regional economic crisis impacts the Swedish financial system, threatening material spill-over to the government balance sheet.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Dennis Shen, Director.

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