Heimstaden - comment

Further examination of the prospectus of Heimstaden AB's perpetual bonds has revealed the real reason for the rating request.  The ratings deemed a Positive Rating Event under the bonds' terms, resulted in the margin over 3-month STIBOR remaining at 5.9% instead of stepping up to 8.4%.  This "Positive Rating Event” had to occur before the First Call Date, 11th October.  S&P ratings of B- on Monday satisfies this condition.  The Positive Rating Event also triggered some other clauses, but those are less relevant at this time.  

Overall, the ratings do nothing to change our view, and with the coupon currently suspended, the lack of the step-up margin will only have limited impact.