/biz/ - Business & Finance

>Sweden's government is ready to step in to stem the fallout from a property rout if tumbling prices cause a wider crisis - a potential harbinger of trouble across Europe. 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.

>Concerns about the property sector are already weighing on the currency, while investors are wondering if Sweden is only the first domino to fall in Europe. Sweden and Germany are among the worst affected by a widening property slump on the continent, according to Eurostat.

>Property is the lynchpin of the Swedish economy, making up 80% of household debt. Weighed down by home loans, Swedes are twice as heavily indebted as Germans or Italians. Commercial real estate makes up 18% of bank loans, according to the OECD, more than three times the level in Spain or Ireland. Swedish officials are worried that banks could compound property companies' troubled by cutting credit, triggering firesales that would further drag down the market. One of Sweden's biggest landlords, SBB (SBBb.ST), is at the centre of the spiral. It is scrambling to salvage its finances after recently seeing its credit rating downgraded to junk. Coupled with falling property prices and rising mortgage costs, the crisis also threatens a voter backlash against a government already under pressure over a rising tide of gang violence.

>Financial markets minister Wykman said he had held discussions with banks, property companies and investors about the entire commercial property market. This week, analysts at JP Morgan said big banks in Sweden, which had 1 trillion Swedish crowns of property exposure, were 'ill-prepared' for losses.

https://www.reuters.com/markets/europe/sweden-braces-fallout-property-slump-2023-06-16/

What bailout terms should the PIIGS impose on the lazy profligate northern Europe? Is it a good idea to long rape-gangs in Sweden?