Nordic Credit Rating (NCR) said today that it had assigned a 'BBB-' long-term issuer rating to Sweden-based Catena AB (publ) (Catena). The outlook is stable. At the same time NCR assigned an 'N-1+' short-term issuer rating.
Rationale
The long-term rating reflects the company's strong position as one of the larger logistics property managers in Sweden, long remaining lease terms, and high occupancy rate. It further reflects the benefits of increasing e-commerce to the logistics sector, as well as Catena's solid profitability and strong interest coverage.
These strengths are offset by relatively weak debt/EBITDA and a financial risk appetite that, in our view, is greater than warranted by the company's financial ratios. Specifically, we view Catena's short debt maturity profile with significant maturities concentrated in single years as a credit weakness, adversely affecting our overall opinion of the company's financial position. Furthermore, we view the high tenant concentrations in the portfolio as a weakness, although these are mitigated by a significant proportion of government-backed tenants and tenants with exposure to the non-cyclical grocery business.
Stable outlook
The stable outlook reflects our expectation that Catena will maintain its focus on logistics properties in attractive locations in Sweden and Denmark. We expect the company to continue growing, primarily through project development, and that it will maintain its net loan-to-value ratio below 50%, in line with its recently revised financial policy. Furthermore, we expect a continued increase in e-commerce to benefit the logistics subsector, and that Catena will be proactive in refinancing upcoming debt maturities. We could raise the rating to reflect improved credit metrics, reduced tenant concentrations, or a proven commitment to the new financial policy and a less concentrated debt maturity profile. We could lower the rating to reflect increased financial gearing or deteriorating market fundamentals that adversely affect occupancy and/or profitability.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | BBB- |
| Outlook: | Stable |
| Short-term issuer credit rating: | N-1+ |
If you have any questions, please contact:
Marcus Gustavsson, credit rating analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com
Mille O. Fjeldstad, credit rating analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Methodology published on 14 Aug. 2018 and NCR's Rating Principles published on 16 Sep. 2019. For the full regulatory disclaimer please see the rating report.