One of the biggest office landlords in Sweden’s capital has seen its junk credit rating lowered a further two steps by Moody’s Investors Service with a warning that further downgrades could be on the way.
(Bloomberg) — One of the biggest office landlords in Sweden’s capital has seen its junk credit rating lowered a further two steps by Moody’s Investors Service with a warning that further downgrades could be on the way.
Stockholm-based FastPartner AB’s corporate family rating was cut to Ba3 from Ba1 and its outlook was revised to negative from ratings under review, according to a statement by Moody’s after market close on Tuesday.
The double downgrade reflects the company’s “rising challenges from increased interest rates, weakening the outlook for property values and increasing the marginal cost of debt,” Moody’s analysts said. That in turn is weighing on interest and asset coverage ratios, they added.
Sweden’s commercial landlords are racing to refinance a $17 billion wall of maturing bond debt over the next 18 months, which is putting pressure on companies such as FastPartner to plug the financing gap. A lower junk rating only adds to the challenge given investors will demand higher rates of interest to hold the debt.
“We have continued to strengthen our liquidity and are of the opinion that a healthy liquidity is far more important than whether the interest coverage ratio is 2.0 or 1.9,” FastPartner Chief Executive Officer Sven-Olof Johansson said in a separate statement.
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