S&P trims Heimstaden Bostad

S&P said it lowered its ratings for Heimstaden Bostad AB and its senior unsecured notes to BBB- from BBB and its hybrid debt to BB from BB+.

“The downgrade follows our updated base-case assumptions, with S&P Global Ratings-adjusted EBITDA interest coverage dropping below 1.8x in the next 12-18 months amid higher funding costs, and our view of a reduced likelihood of shareholder capital injections in the short term. Following Heimstaden's third-quarter results, S&P Global Ratings adjusted-EBITDA interest coverage stood at 1.9x for the rolling 12 months, reaching our downside threshold of toward 1.8x for the 'BBB' rating.

“We believe the recent drop will not be temporary and forecast the ratio will weaken slightly over 2024 and 2025 to about 1.5x, versus 1.8x-2x in our previous forecast,” S&P said in a press release.

The agency also noted it expects the company's debt to EBITDA to remain high at close to 20x.

The outlook is negative.

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