Magnolia Bostad-Pressure on the equity ratio with covenant step-up closing in-07/08/2026

Research evidence excerpt

Magnolia Bostad-Pressure on the equity ratio with covenant step-up closing in-07/08/2026

Magnolia Bostad

CREDIT NEWSFLASH | 8 JUL 2026

Pressure on the equity ratio with covenant step-up closing in

Magnolia Bostad’s Q2’26 sales were soft as we have not seen material residential sales, which resulted in continued pressure

on the equity ratio which at the end of the quarter stood at 20.9% vs covenant of 20% (step up to 25% in September). The

management is confident that more material sales will be booked in the upcoming months. We note that asset base of SEK

~2bn offers a solid asset coverage for the total debt of SEK 1.7bn even if we consider downward valuation adjustments. The

bonds are indicated in the mid-80s, representing yields >20%, which in our view provides solid headroom to investors and

is an attractive entry point given the risks associated with timing of residential sales and valuations.

Uneventful quarter with limited new project sales resulting in pressure on the equity maintenance covenant

• Magnolia reported Q2 figures with continued soft net sales. 157 residences were sold in H1’26 vs 1,122 during the same period last year.

• While we understand that the sales profile is naturally lumpy, a string of quarters with soft sales has put pressure on the equity ratio,

currently standing at 20.9%, just 0.9% above the maintenance covenant limit.

• Further, by 30 September 2026, the maintenance covenant steps up from 20% to 25%, making a breach possible.

• Having spoken to management prior to the report, we understand that the company is exploring several options to bolster sales and the

management is confident that they will be compliant with the covenant by the next testing date.