Sweden’s SBB to buy back debt at 60% discount


SWEDISH real estate group SBB said on Sunday (Mar 24) it would buy back debt at a discount of 60 per cent compared with the debt’s original value, in an attempt to calm investors’ nerves as it scrambles to tackle a multi-billion debt pile.

The property group said it would pay 162.7 million euros (S$237 million) to buy back 407.7 million euros’ worth of debt.

The buyback will trim the struggling property company’s debts, which amounted to some 62 billion Swedish crowns (S$7.9 billion) at the end of last year.

High debt levels, interest rate hikes and a wilting economy have hit many European property companies, with the sector in Sweden among the worst affected.

“It was an extremely large discount... SBB appears to be making a profit of around SEK 2.8 billion on the buyback. This compares with a market capitalisation of SEK 6.3 billion for SBB,” said Carlsquare analyst Bertil Nilsson.

“SBB’s share price should rise as a result, but I won’t believe it until I see it.”

SBB last week offered to buy back more of its debt, seeking to reassure investors about its finances amid a property market downturn.

SBB said on Sunday it would buy back hybrid bonds and senior securities maturing between 2025 and 2029.

“Debt needs to be repurchased, which can occur at a faster pace when bonds are repurchased below par value. The voluntary tender generates equity and provides better conditions for successfully developing the business. This benefits the company’s stakeholders,” CEO Leiv Synnes told Reuters in a written statement.

Some companies have launched tender offers for their bonds, aiming to reduce debt at discounted prices and signal to investors that their finances are strong enough to do so.

SBB late last year spent 403.8 million euros on buying back debt at a discount of around 3 per cent.

On Friday the price of the latest buyback was set via a so-called Dutch auction. SBB had initially said it could buy back debt for up to 250 million euros, which equated to around 70 per cent of its liquidity as at Dec 31.

SBB has over the past few years built up a vast amount of debt buying public real estate including social housing, government offices, schools and hospitals.

Shares of SBB closed 6.2 per cent higher on Friday at 3.7 Swedish crowns. The stock has declined 27 per cent so far this year after falling more than 70 per cent in 2023.