Heimstaden AB - comment

Heimstaden AB has successfully extended its maturity profile cheaper than we had expected.  Heimstaden AB issued €430m 5NC3 bonds at 8.375% and SEK750m 3.5yr at SEK + 600bps, enabling the Company to fund the tender at par for the SEK 2025 and Euro 2026 bonds.  Tender levels were in the 80’s for the SEK bonds and 95% for the Euro bond. The non-tendered bonds will now be called at par, removing any short-term maturities.  Investors in Heimstaden AB appear willing to wait, with no material cash generation expected in the absence of dividends.  Theoretically, there is significant asset coverage, with investors' coupon funded by excess cash raised in this bond offering.  We acknowledge the asset coverage but query how any investor would be able to realise it due to the ownership/investment structure of Heimstaden Bostad.