Heimstaden Bostad - comment

Widely expected (if not a little late), S&P downgraded Heimstaden Bostad to BBB-, with a negative outlook. This downgrade was well flagged with the Company acknowledging they would not maintain Heimstaden Bostad’s ICR ratio above 1.8x over the coming 2yrs. The ratings do not include any proceeds from the sale of SEK 20bn of Gross Asset Value through 2025 with a premium of 25% to Book Value (Privatisation Plan). The Plan commenced with a modest budget in FY23, which the Company has already exceeded. 

In an accompanying presentation, the Company states they are committed to an investment grade rating, and maintain a financial policy to support this. Surprisingly, there is no mention of an equity injection by shareholders, which was a central theme of previous Company statements. This leaves the door open for the Company to suspend coupon on the Hybrids.