(Bloomberg) — Swedish landlord Heimstaden Bostad AB has returned to the public bond markets in its home country for the first time in two-and-a-half years as funding conditions continue to improve for a sector that was in turmoil last year.
The residential property group, among Europe’s biggest, is marketing 500 million Swedish kronor ($49 million) worth of floating-rate notes at a price of 240 basis points over the interbank reference rate, Stibor, according to a person familiar with the matter who asked not to be identified. Nordea Bank Abp and Swedbank AB are bookrunners on the three-year deal, said the person.
The new deal marks a dramatic shift for a company that has pledged to offload apartments totaling 20 billion kronor as it strives to improve its financial ratios in the face of pressure from the rating companies. In March, Fitch Ratings cut the landlord’s credit grade to one step above junk, matching the assessment of Standard & Poor’s, which has rated the company BBB- since December. Both have Heimstaden Bostad on negative outlook, meaning that unless there’s an improvement in key credit metrics a downgrade into high yield is a real possibility.
The move is all the more surprising given Heimstaden Bostad said earlier this month it will continue to focus on “local asset-backed financing as capital markets remain uncompetitive to alternative funding sources,” as part of its second-quarter report. The landlord in August refinanced part of its portfolio in the Netherlands through a new €750 million ($838 million) sustainability-linked loan maturing in 2031. ING Bank NV and Natixis Pfandbriefbank AG provided the financing.
When Heimstaden Bostad last sold bonds in kronor, the five-year issue priced at 140 basis points over Stibor. The company did not immediately respond to a request for comment when contacted by Bloomberg News.
–With assistance from Colin Keatinge.
©2024 Bloomberg L.P.