(Bloomberg) -- The crisis engulfing Swedish landlord SBB worsened after the chief executive officer’s investment company skipped interest payments on its hybrid bonds.

Ilija Batljan Invest AB, a holding company that relies on payouts from Samhallsbyggnadsbolaget i Norden AB to service its debt, said that it would temporarily stop paying the coupons on its Swedish kronor hybrid notes following SBB’s decision to pause its dividend earlier this month.

News of the skipped bond payment helped fuel a sharp selloff in SBB’s shares, which closed Wednesday at their lowest level since its stock market debut in 2017. The holding company’s hybrid bonds also slumped to a record low price of 6.04, indicating that traders expect little prospect of recovery from the notes that were sold at par two years ago.

Companies that issue hybrid notes — securities with very long or no maturities that rank junior to senior unsecured debt — have the right to pause interest payments without it being classified as a default. They have been a popular funding tool for landlords such as SBB in the years of zero interest rates because of the favorable treatment they get at rating firms when calculating debt ratios.

Read More: SBB Dividend Pause Puts Pressure on CEO Company’s Bonds 

Prior to Wednesday, the bonds sold by Ilija Batljan Invest had already been indicated at deeply distressed levels amid the turmoil surrounding SBB — a company that has found itself at the center of Sweden’s property rout having amassed a debt pile of $8 billion. The scale of SBB’s borrowing and the complexities around its balance sheet has caught the attention of short sellers and led to calls from the rating agencies to cut back on leverage.

Earlier this week, SBB announced that it would start a strategic review that could lead to a breakup of the company. The landlord has suffered a tumultuous month after it lost its investment grade ratings and was forced to scrap a dividend and rights issue.

The CEO’s holding company has 2.1 billion Swedish kronor in bond debt, of which 1.35 billion kronor matures in 2024. IB Invest described the measure as “cautious against the background of prevailing market conditions,” and added that it intends to resume interest payments as soon as possible. It holds close to 5% of the shares in SBB. 

The firm, which was expected to pay interest on its 750 million kronor hybrid bond on June 15, could see its total recurring income fall to 100 million kronor due to the dividend postponement, according to estimates from Scope Ratings. 

--With assistance from Jonas Ekblom.

(Updates with share price in third paragraph.)

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