Sweden’s beleaguered property sector suffered another blow late on Friday night when one of the largest office landlords in the capital was downgraded to junk status by Moody’s Investors Service.

Stockholm-based FastPartner AB saw its rating cut one step to Ba1 with the possibility for further downgrades to come if the company cannot shore up its finances. The cut “reflects the rapid increase in interest rates combined with subsequently challenging capital markets,” Moody’s said in a statement.

The property firm, with 80% of its rental value from the Greater Stockholm area, joins a growing list of so-called fallen angels that have seen their ratings leave the investment grade bracket and enter high yield. The rating actions are exacerbating a financing crunch in a market that is seen as a canary in the coal mine for Europe’s real estate industry given much of the debt is short term and floating rate.

Armed with an investment grade rating, companies such as Samhallsbyggnadsbolaget i Norden AB and Fastighets AB Balder were able to raise billions of dollars debt on the bond markets during the era of zero interest rates. But with a jump in interest rates and the prospect of falling property valuations, landlords have been increasingly unable to defend their credit ratings despite efforts to offload assets and seek alternative bank financing.

For FastPartner, Moody’s said that the benefits of inflation-linked rents over the coming months “are unlikely to be sufficient to offset pressure on valuations and from higher funding costs.”

In a separate statement released shortly before midnight on Friday, FastPartner Chief Executive Officer Sven-Olof Johansson said that “the lowered credit rating has marginal significance for the company’s day-to-day operations.”