Hedge funds have cranked up their bets against Sweden’s real estate sector
as investors predict higher interest rates will weigh on domestic property prices and expose its vulnerability to tighter bank lending.
Traders’ worries have intensified after S&P on Monday flagged its concerns over the outlook for SBB, one of the market’s biggest players, which needs to refinance short-term debt that matures in the coming year.
Hedge funds’ short positions in the Swedish real estate sector have soared this year, reaching their highest level in over a decade, according to data provider Breakout Point.
FT 11 May 2023
https://www.ft.com/content/97b03a7e-a70f-48a2-b048-332b53edccf3
A botched fundraising by one of Sweden’s most leveraged real estate firms
SBB has assets that analysts reckon are good quality, comprising public buildings such as schools and social housing. Government-backed rental income certainly makes these more attractive than second-grade commercial offices. The snag is the usual one: SBB has too much debt.
S&P Global Ratings this week downgraded the company’s creditworthiness to junk. Net borrowings are 78 billion kronor ($7.6 billion). Some 14 billion kronor matures in the next 12 months, S&P points out.
So SBB’s market capitalization has fallen to just 10 billion kronor from 100 billion kronor in 2021
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