EU REAL ESTATE: Sveafastigheter AB (SVEFAS): 5yr Thoughts
• SVEFAS (NR/NR/BBB- pos)
• Sveafastighterhas one outstanding EUR deal SVEFAS 4.75 27 which is quoted around z+260. This deal was issued in an exchange for SBB i Norden Perps and is very small. We do not think it is a fair reflection of where the name should trade.
• Recent SEK FRNs have been issued at +70bps wide of HEIBOS in 5yr.
• Sveafastighter is a fairly small manager and developer of Residential assets in Sweden. The portfolio value is €2.5bn vs Heimstaden Bostad's €30bn. A closer comparison in size is DVI Deutsche Vermoegens & Immo which has €3bn.
• The portfolio comprises of ~15k apartments which are typically older stock. The company plans to upgrade 2,000 over 5yrs and to add 600-800 per year via new development.
• Refurbishing apartments allows the company to charge higher rent in a tightly controlled regulatory system.
• Sveafastighter does still have a lot of secured debt: 27% of assets, but this is lower than HEIBOS at 32% of assets. ICR is stronger at 2x vs 1.6x for HEIBOS. ND/E is 18x but falls to 14x when earnings uplift for the next 12 months of development are considered. HEIBOS is 13.6x.
• LTV for SVEFAS is 42% which is much lower than HEIBOS' 54% (S&P calcs) closer to DVIVER's 42.3%.
• HEIBOS (NR/BBB-/BBB-) DVIVER (NR/BBB-/BBB-)
• DVIVER 30s z+190 trades around +70 to HEIBOS 30s. We would consider this mandate as effectively an inaugural issue. DVI is a good comp. There may be a discount given the legacy relationship with SBB.
• In terms of management. 5 out of 7 directors are independent of SBB. DVI however is a family run private company which is somewhat opaque.
• SVEFAS is listed. SBB owns 61.7%.
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USDCAD TECHS: Bull Channel Breakout
- RES 4: 1.4140 High Nov 5 and a key resistance
- RES 3: 1.4131 High Nov 21
- RES 2: 1.4051 High Nov 28
- RES 1: 1.3939/4016 Low Nov 28 / 20-day EMA
- PRICE: 1.3865 @ 16:35 GMT Dec 5
- SUP 1: 1.3853 Intraday low
- SUP 2: 1.3840 50.0% retracement of the Jun 16 - Nov 6 bull cycle
- SUP 3: 1.3812 Low Sep 23
- SUP 4: 1.3779 Low Sep 22
A bear theme in USDCAD remains intact and Friday’s strong sell-off reinforces a bear theme. The pair has breached an important support at 1.3942, the base of a bull channel drawn from the Jul 23 low. The break highlights a stronger bear cycle and signals scope for an extension towards 1.3840 next, a Fibonacci retracement point. Initial firm resistance to watch is 1.4016, 20-day EMA.
LOOK AHEAD: US Week Ahead: FOMC Decision Dominates, Post Shutdown Data Catch-Up
- Next week’s US calendar is dominated by the FOMC decision on Wednesday, with a third consecutive 25bp cut almost fully priced.
- Expect it to be a contentious meeting however, with many arguing for a pause not least whilst they’re still relatively in the dark on key official data releases following the government shutdown.
- Fed Chair Powell opted for a surprisingly hawkish tone at the late October press conference, highlighting a deeply divided committee on prospects for another cut in December.
- The “fog” had appeared to win out until NY Fed’s Williams, a senior permanent voter, gave unusually explicit guidance on still seeing room “for a further adjustment in the near term”. With no pushback from FOMC members or media briefings, it appears this message has approval from the core of the FOMC which should be enough to see a rate cut this month. The likely catalyst was the further increase in the unemployment rate to 4.44% back in September, although subsequent tracking suggests stabilization and jobless claims data don’t show any signs of deterioration.
- We’ll be looking for the number of hawkish dissents (we’d be surprised if anyone joins Miran dissenting for a 50bp cut) and expect a greater number to object to a cut in the 2025 dot plot, whilst the distribution of dots for 2026 should be in greater focus.
- As for the economic projections, we expect upward revisions to GDP growth but downward revisions to near-term core PCE inflation with tariff passthrough proving less severe than previously feared.
Aside from the Fed, we also receive two months worth of JOLTS data along with other delayed releases as the shutdown data backlog is slowly caught up.
AUDUSD TECHS: Bullish Impulsive Wave Extends
- RES 4: 0.6723 High Oct 21 ‘24
- RES 3: 0.6707 High Sep 17 and a key resistance
- RES 2: 0.6660 High Sep 18
- RES 1: 0.6649 Intraday high
- PRICE: 0.6630 @ 16:32 GMT Dec 5
- SUP 1: 0.6580/6533 High Nov 13 / 20-day EMA
- SUP 2: 0.6517 Low Nov 27
- SUP 3: 0.6466/21 Low Nov 26 / 21
- SUP 4: 0.6415 Low Aug 21 / 22 and a bear trigger
A strong impulsive bull wave in AUDUSD remains intact, having printed 10 consecutive sessions of higher highs. Recent gains have cleared a number of important short-term resistance points, strengthening a bull theme and highlighting scope for a continuation higher. Today’s rally has resulted in a breach of 0.6640, 76.4% of the Sep 17 - Nov 21 bear leg. This opens 0.6707, the Sep 17 high and key resistance. Key support to watch is at 0.6533, 20-day EMA.
