Swedish landlord SBB saw its share price fall to the lowest level in nearly five years after the company announced plans to postpone a dividend and cancel a rights issue intended to shore up its finances.
(Bloomberg) — Swedish landlord SBB saw its share price fall to the lowest level in nearly five years after the company announced plans to postpone a dividend and cancel a rights issue intended to shore up its finances.
Shares in Samhallsbyggnadsbolaget i Norden AB — as SBB is formally known — dropped as much as 9.5% when trading started in the Swedish capital.
That compounded the losses from Monday when the stock slumped 20% following a credit rating cut to junk by S&P Global Ratings.
In a statement issued at 11 p.m. Stockholm time on Monday, the property company said that “the market reaction thereafter has made it impossible to carry out the rights issue of ordinary D-shares on the intended terms.”
Read More: SBB Halts Dividend Payment as Sweden Real Estate Concerns Deepen
The developments raise serious questions for one of Sweden’s biggest landlords as it grapples with an $8.1 billion debt load amid sharply rising interest rates and ballooning credit spreads.
It’s also symptomatic of the problems facing the wider commercial property sector in Sweden.
Swedish landlords must roll over $40.8 billion of maturing bond debt over the next five years, a quarter of which falls due in 2023.
They have been viewed as the canary in the coal mine for European real estate because much of that debt is short term and floating rate, making it particularly exposed to interest rates.
Analysts at Arctic Securities AS welcomed the plan by SBB to improve its liquidity position.
“These two decisions, pausing the dividend payout and cancelling the planned issue of D-shares, are as a whole positive for SBB shareholders,” real estate analyst Michael Johansson said by phone.
“The problem for SBB is that the dividend has already been voted through at the AGM, so their only option is to pause it,” he added.
Credit analysts at Danske Bank A/S however cautioned that the canceled share issue was “illustrative of SBB’s current lack of access to capital markets, increasing refinancing risks,” they wrote in a note.
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