Sweden’s heavily indebted commercial real estate owners remain vulnerable to rising borrowing costs, and may need to reduce their debt by some 100 billion Swedish kronor ($9.6 billion), the country’s financial watchdog said.

Even as companies in the sector have sought to strengthen their balance sheets by offloading assets and raising new equity, more needs to be done, Finansinspektionen said in an analysis published on Tuesday. The agency estimates that if average interest expenses increase to 5% and property values fall by 20%, the real estate firms on average need to reduce their debt by about 15% to be able to keep profits at a higher level than credit costs.