(Bloomberg) -- A tentative funding revival in Sweden’s commercial property sector suffered a setback on Wednesday after a landlord was forced to scrap a convertible bond sale owing to a lack of demand.

Residential property firm K-Fast Holding AB said it canceled a planned 300 million kronor ($27 million) convertible bond issue after consulting with its arrangers Pareto Securities AS and Carnegie Investment Bank AB, according to a statement. 

“The market has not shown sufficient interest in participating in the directed issue on terms where the board of directors can motivate the shareholders to carry out the directed issue,” Chairman Erik Selin said.

Many of Sweden’s over-leveraged property companies have been priced out of the capital markets amid a surge in borrowing costs over the past 18 months. But in recent weeks there has been a ray of hope as the domestic bond market opened up for several issuers, including even lower-rated companies Stendorren Fastigheter AB and NP3 Fastigheter AB.

Read More: Sweden’s Junk-Rated Landlords Brave Market With Bond Sales

Still, the recent pickup in activity is dwarfed by the $17 billion of bond debt that needs to be refinanced by next year. That has left many landlords resorting to asset sales or equity raising to shore up their balance sheets.

K-Fast’s planned bond issue could have been converted into new Class B shares under certain conditions, it said at the start of the week. The proceeds were earmarked to refinance existing debt, as well as for construction starts and buying building rights. 

Its shares fell as much as 4.7% at the start of trading in Stockholm.

©2023 Bloomberg L.P.