Shares of heavily indebted Swedish owner SBB continued their multi-day spiral on Tuesday, falling after the company announced late Monday that it would postpone paying its dividend in a bid to preserve cash.
The rocky reception followed Monday’s downgrade of the company’s bonds by S&P Global Ratings to junk. The downgrade is expected to further increase the Stockholm-based owner’s interest payments and could make it more difficult to refinance its high debt maturing in the next two years.
SBB, one of Sweden’s most widely held stocks, has become a high-profile victim of rising interest rates as falling values halted a wave of debt-fueled expansion. Its market capitalization has fallen from over $17 billion at the end of 2021 to less than $1.5 billion, a giant drop for its more than 260,000 shareholders.
Shares have fallen 14 over the past 15 trading days. In Tuesday’s recent session, the stock was around 14% lower at SEK 7.20 per share.
The dividend paid by SBB – officially known as Samhällsbyggnadsbolaget i Norden – has been a focal point for investors. Despite a broad strategy to raise funds by selling assets, SBB announced earlier this year that it would raise the dividend to 1.4 Swedish krona per share per year, a move Nordea analysts called a ‘”unsustainable”.
SBB announced on Monday evening that it would also abandon a planned share offering that sought to raise more than $250 million amid a falling share price.
The postponement of the dividend will weigh on the personal finances of SBB CEO Ilija Batljan, who has raised bonds tied to his shares in SBB and other companies. Its holding company Ilija Batljan Holdings said in its annual report that the dividends it received were “very significant” for its “long-term endurance and value creation”.
On Thursday, Scope Ratings downgraded two categories of these bonds below investment grade. Among other factors, Scope cited “a fall in the share price of its main holding company SBB”.