Exchange traded funds that track Scandinavian or Nordic countries have attracted investors with their stable triple-A credit, but some are growing wary, pointing to the region’s rising household debt and potential housing bubble as a cause for concern.

Denmark, Finland, Norway and Sweden sport stable AAA credit ratings, which have driven down borrowing costs and fueled consumer borrowing, reports Peter Levring for Bloomberg.

Now, the International Monetary Fund and Organization for Economic Cooperation and Development argue that the country’s household debt levels pose a threat to stability.

“You wonder if that’s a crisis waiting to happen,” Nobel Laureate Paul Krugman said in the article. “I’m not sure, but it’s nervous-making.”

For instance, in Denmark, consumers owe 321% of disposable income, a world record. In Sweden, debt is close to 180%. In Norway, private debt hovers around 200%.

Meanwhile, the three countries have seen their housing markets jump since the global financial crisis in 2008.

“You look at high debt ratios and high house prices in the Nordic area and people say ‘well, that’s different from high house prices elsewhere,’” Krugman said. “It’s a warning phrase. When you hear that, you should get very worried.”

Officials are already looking at ways to limit borrowing. Looking ahead, these countries could see growth slow as they go through a deleveraging process.

Investors who would like to track the Nordic countries can take a look at the Global X FTSE Nordic Region ETF (NYSEArca: GXF). which follows companies from Norway, Sweden, Denmark and Finland. [10 Best Global ETFs of 2013]

There are also ETFs that track the individual countries, including iShares MSCI Norway Cppd Investable Mkt (NYSEArca: ENOR), Global X Norway 30 ETF (NYSEArca: NORW), iShares MSCI Sweden ETF (NYSEArca: EWD), iShares MSCI Denmark Capped ETF (NYSEArca: EDEN) and iShares MSCI Finland Capped ETF (NYSEArca: EFNL). [Demographics Weigh on Finland Economy, ETF]

For more information on Europe, visit our Europe category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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