Even as slumping property prices and surging financing costs weigh on the Nordic country’s economy, authorities believe they can ride out the turmoil without widespread intervention. That leaves indebted landlords like Samhallsbyggnadsbolaget i Norden AB — commonly known as SBB — isolated as they battle to close funding gaps.
The government’s stance is backed by regulators and lenders in the country. Swedish watchdog Finansinspektionen says bank profitability and capital buffers provide enough resilience to withstand a shock, even if risks of credit losses have increased. Swedbank AB Chief Executive Officer Jens Henriksson told Bloomberg this week that he’s “confident” in the credit portfolio of the bank — one of Sweden’s top three lenders — and sees progress in the measures taken by real estate companies.
Several of those smaller companies have gone to bondholders in the past 12 months to ask for looser terms to avoid breaching covenants or worse. Examples include Sehlhall Holding AB, Oscar Properties Holding AB, Nivika Fastigheter AB and most recently Wastbygg Gruppen AB. Niklas Wykman, Sweden’s financial markets minister, sounded out market participants after SBB lost its investment-grade status in May. He concluded that there was sufficient interest in Swedish public-sector properties. On Monday, Fitch Ratings noted that the portfolio remains solid, even as it downgraded SBB five notches deeper into junk amid refinancing concerns.