(Reuters) – Rating agency Fitch on Friday said it had cut its long-term credit rating for Swedish real estate company Heimstaden AB to “BB” from “BB+”, with the outlook revised to “rating watch negative”, citing the rising cost of interest on its debt.
Fitch repeated the “BBB” rating for Heimstaden’s struggling subsidiary, landlord Heimstaden Bostad, but put it on negative rating watch, due to slow deleveraging and rising interest rates.
The decision comes just weeks after Swedish pension fund Alecta, one of the largest shareholders in Heimstaden Bostad, said the property company was in need of more cash.
On Friday, Fitch said Heimstaden AB’s interest cover is at risk of no longer being supported by regular dividend income from Heimstaden Bostad.
Heimstaden’s difficulties are the latest blow in a worsening property crisis in Sweden, where developers are grappling with large debts, rising interest rates and a wilting economy.
Shares in Heimstaden traded down about 3% at 1307 GMT.
(Reporting by Greta Rosen Fondahn in Gdansk; Editing by Hugh Lawson)
