SummaryCompaniesSweden’s property prices slideTop residential landlord reveals search for cashGovernment ready to help sector but hopes to avoidSTOCKHOLM, Sept 15 (Reuters) – For months, Sweden’s government has sought to play down a property crisis that has throttled confidence in the Nordic state, repeating a simple message: While some companies are in trouble, the country is not.Now Heimstaden Bostad, a $30 billion property investor with swathes of homes from Stockholm to Berlin, is grappling with a multibillion dollar funding crunch, which has rebounded on one of its owners – the country’s biggest pension fund.That undoubtedly raises the stakes for Sweden, the European nation hardest hit by a global property rout triggered by the steep rise in interest rates last year that abruptly ended a decade of virtually free money.Sweden is one of Europe’s wealthiest states and the biggest Nordic economy, but it has an Achilles Heel – a <a href="https://news.ad-astra.icu/country-garden-a-chinese-property-giant-experiences-a-downfall-amidst-a-renewed-storm.html" title="Country Garden, a Chinese property giant, experiences a downfall amidst a renewed storm.”>property market where banks have lent more than 4 trillion Swedish crowns ($360 billion) to homeowners. Weighed down by these home loans, Swedes are twice as heavily indebted as Germans or Italians.Earlier this year, the International Monetary Fund flagged Sweden’s historically high household borrowing coupled with debt-driven commercial property firms and their dependence on local banks as a financial stability risk.The property crisis accelerated this month when pension fund Alecta, which owns a 38% stake in Heimstaden Bostad, said Sweden’s biggest residential landlord needed cash and it may contribute.Swedbank estimates the current shortfall for Heimstaden Bostad could be roughly 30 billion crowns ($2.7 billion).Sweden’s financial regulator launched an inquiry into why and how Alecta had invested $4.5 billion in the property giant, in the first place. Its troubled investment accounts for 4% of its funds.Christian Dreyer, a spokesperson for Heimstaden, said it had made “good progress covering 2024 bond repayments”, and was “not reliant on immediate capital injection for meeting our obligations”.But he also signaled that the company was open to other support.Reuters GraphicsGOVT GETS READYAs the property crisis widens, Sweden’s government is readying for action while crossing its fingers that it will not be needed.Earlier this year, Karolina Ekholm, Director General of Sweden’s Debt Office, said the government had a light debt load and could afford to borrow more to intervene, addressing the possibility of giving credit guarantees or subsidised loans.One person familiar with government thinking said that while the state was willing to help in principle, it was conscious of the potential political backlash of supporting companies which had taken big risks.Heimstaden’s Dreyer said it was examining a “potential recapitalisation from existing shareholders” and was confident it could “mitigate financial risk” in part through bank financing but expressed openness to other forms of support.”While we’re not dependent on…
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