Sweden

Sweden’s housing starts extended a plunge into the second quarter as lower home prices and rising construction costs put the brakes on building activity, Bloomberg News reported. Construction started on about 14,550 new homes in the first half of the year, which represents a 57% decline from the year-ago period, Statistics Sweden said on Thursday. Housing starts have been on a downward trajectory since last year, hit by one of the world’s biggest declines in residential property prices that’s in recent months leveled off.

The founder of SBB once said the property company could withstand interest rates of 10%. In reality, less dramatic increases have turned the stock into a bonanza for short sellers, the Wall Street Journal reported. The Swedish landlord was set up in 2016 and borrowed heavily over the next few years to pay for its growing property empire. SBB was “hooked on the crack of cheap debt,” according to Viceroy Research founder Fraser Perring, whose hedge fund published a critical report about the company last year and questioned whether it was valuing its assets properly.

UBS Group AG will pay a total of about $387 million in fines related to misconduct by Credit Suisse Group AG in its dealings with Archegos Capital Management as the new owner of the collapsed Swiss rival starts picking up its legal tab, Bloomberg News reported. In a consent order with the Federal Reserve, UBS agreed to pay $268.5 million for “unsafe and unsound counterparty credit-risk management practices” at Credit Suisse, which UBS acquired in June.

SBB, the embattled landlord at the center of Sweden’s property crisis, received demands from a group of bondholders to make sweeping changes, in an escalation of tensions over efforts to close a looming funding gap, Bloomberg News reported. The creditors, advised by PJT Partners, demanded that Samhallsbyggnadsbolaget i Norden AB — as the company is formally known —appoint two new board members and a chief restructuring officer, according to a letter seen by Bloomberg News.

Svenska Handelsbanken AB, Sweden’s third biggest bank by market value, may see its public credit rating lowered if the fallout from the country’s property crisis continues to deepen, Bloomberg News reported. That’s the assessment of Moody’s Investors Service, which late on Friday lowered the lender’s credit rating outlook to negative from stable owing to its relatively high exposure to the real estate sector. The Stockholm-based lender has a “very significant” 29% of its loan book exposed to the real estate sector, according to Moody’s.

The Swedish economy is facing headwinds from rising interest rates, high inflation and a slump in private consumption and is seen contracting this year, the Organization for Economic Cooperation and Development (OECD) said on Wednesday, Reuters reported. After faring relatively well through the pandemic, soaring consumer price rises and interest rates have begun taking a toll. Swedish households are among the most heavily indebted in Europe while many have floating-rate mortgages, meaning central bank rate hikes quickly result in higher costs.

Ilija Batljan, the founder and dominant shareholder of embattled Swedish landlord SBB, stepped down as chief executive officer in a dramatic move that highlights the uphill battle he faces to save his $13 billion empire, Bloomberg News reported. Batljan, who founded Samhallsbyggnadsbolaget i Norden AB in 2017, will hand off executive responsibility as of June 5, the Stockholm-based company said Friday in a statement. He will be replaced by Leiv Synnes, who has served as chief financial officer of Akelius Residential Property AB since 2014.

SAS's rescue has moved a step closer after a U.S. court approved a revised plan from the Scandinavian airline to raise equity, Reuters reported. The long-suffering airline filed for chapter 11 protection last year. The court approval of the fundraising proposal - a key element of the "SAS Forward" rescue plan - means investors may start placing bids for a stake in the airline.

Sweden’s property crisis worsened after one of the country’s biggest commercial landlords took steps to conserve cash and put its focus on selling assets to plug a funding gap, Bloomberg News reported. SBB postponed a dividend and scrapped plans to sell shares in the wake of a credit rating downgrade to junk. Like many other Swedish property companies, the landlord — formally named Samhallsbyggnadsbolaget i Norden AB — is scrambling to refinance debt, but higher interest rates and investor concerns have closed off many options.

The funding squeeze gripping Sweden’s leveraged property sector worsened on Monday after one of the country’s biggest commercial landlords saw its credit rating cut to junk with a warning that a further downgrade is possible, Bloomberg News reported. SBB — as Samhallsbyggnadsbolaget i Norden AB is more commonly known — was lowered to BB+ and placed on negative outlook by S&P Global Ratings. The rating firm said it no longer believed the landlord could meet its thresholds for investment-grade debt metrics.