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REAL ESTATE: Heimstaden Bostad (HEIBOS: BBB- neg/BBB- neg): Gone Too Far ?

REAL ESTATE
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  • Heimstaden Bostad (HEIBOS: BBB- neg/BBB- neg) is trading more or less flat to AroundTown (ARNDTN: BBB+ neg)
  • HEIBOS 1.375 28 has rallied 63bps this month, outperforming ARNDTN 1.45 28 by 50bps
  • HEIBOS senior debt currently has a weighted average coupon of 1.63%
  • If we adjust the coupons to reflect current yield, then we get 4.37%
  • If we only change upcoming 2025 bonds to reflect current market conditions then the weighted average moves to 2.08%
  • This is pertinent for a company where ICR is only 1.6x. A 30% rise in coupon drops the ICR to 1.25x: below the 1.5x S&P threshold for Junk.
  • Heibos does enjoy higher occupancy than Aroundtown as it is more exposed to Residential (92% vs 33%) but definitely one to watch given the 2 notch difference

 

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  • Heimstaden Bostad (HEIBOS: BBB- neg/BBB- neg) is trading more or less flat to AroundTown (ARNDTN: BBB+ neg)
  • HEIBOS 1.375 28 has rallied 63bps this month, outperforming ARNDTN 1.45 28 by 50bps
  • HEIBOS senior debt currently has a weighted average coupon of 1.63%
  • If we adjust the coupons to reflect current yield, then we get 4.37%
  • If we only change upcoming 2025 bonds to reflect current market conditions then the weighted average moves to 2.08%
  • This is pertinent for a company where ICR is only 1.6x. A 30% rise in coupon drops the ICR to 1.25x: below the 1.5x S&P threshold for Junk.
  • Heibos does enjoy higher occupancy than Aroundtown as it is more exposed to Residential (92% vs 33%) but definitely one to watch given the 2 notch difference