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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. "If interest rates continue to rise and it's coupled with unemployment, that's what we are afraid of." With interest rates still climbing, analysts such as Marcus Gustavsson of Danske Bank, believe the worst is not yet over. "With rising interest rates, that funny money has turned into real money and it is painful."

Persons: Heimstaden Bostad, Alecta, Christian Dreyer, Karolina Ekholm, Heimstaden's Dreyer, we're, Dreyer, Niklas Wykman, Heimstaden, David Perez, Marcus Gustavsson, Andreas Cervenka, Sweden, Simon Johnson, Johan Ahlander, Greta Rosen Fondahn, Chiara Elisei, John O'Donnell, Hugh Lawson Organizations: International Monetary Fund, GOVT, Sweden's, Financial, Reuters, SBB, Danske Bank, Thomson Locations: STOCKHOLM, Nordic, Stockholm, Berlin, Sweden, Heimstaden, Germany, Gdansk, London

☆ How the ghost of 1990s property crash returned to haunt Sweden
▼ + stars: | 2023-07-28 | by ( John O'Donnell | ) www.reuters.com time to read: +4 min

SummaryCompanies Swedish house market tumbles as rates riseSwedes dusting down 1990s blueprint to contain crisisBanks say willing to seize collateralFRANKFURT, July 28 (Reuters) - Long before Europe faced its debt crisis, Sweden struggled through its own 1990s property crash. At the centre of the fallout is a $13 billion property group, SBB, which borrowed to buy public property including social housing, government offices, schools, hospitals and police stations. While property doubled in value in the five years leading up to the 1990s crash, prices have since risen five-fold. Sweden's bruising experience in the 1990s, when banks seized swathes of property underpinning loans, hardened its approach and gave it a blueprint for coping with crises. Swedbank has 1 trillion crowns ($97 billion) in mortgages and loans to tenant owner associations and a further 240 billion crowns in loans to property management companies.

Persons: Jens Henriksson, Price, Karolina Ekholm, Swedbank's, Swedbank, Carl Cederschiold, Masih Yazdi, Bo Lundgren, Lundgren, John O'Donnell, Marie, Alison Williams Organizations: SBB, Sweden's, Marie Mannes, Thomson Locations: FRANKFURT, Europe, Sweden, rocketed, Stockholm, Swedish

STOCKHOLM/FRANKFURT, July 27 (Reuters) - Sweden has the financial muscle to intervene to stem any fire sale of property from companies rushing to sell out, the head of the country's debt agency told Reuters on Thursday. Karolina Ekholm, Director General at the Debt Office, said the government had a light debt load and could afford to borrow more to intervene to buoy the property sector should a threat emerge to wider financial stability. High debts, rising interest rates and a wilting economy has produced a toxic cocktail for Sweden's commercial property companies, with several cut to junk by rating agencies. The former central bank official pointed to the government's financial clout and that it could issue debt in either euros or U.S. dollars. "It would have to be something that threatens financial stability in Sweden and so far we haven't seen any of that."

Persons: Karolina Ekholm, Ekholm, Conor Humphries Organizations: Reuters, Organisation for Economic Cooperation, Development, AAA, Thomson Locations: STOCKHOLM, FRANKFURT, Sweden

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