Nordic Credit Rating (NCR) has affirmed its 'BBB-' long-term issuer rating on Norway-based residential property developer OBOS BBL. The outlook is stable. The 'N3' short-term issuer rating and the 'BBB-' issue rating on the company's senior unsecured debt were also affirmed.
Rating rationale
The affirmation reflects our expectation of improved operating performance and a return to positive EBITDA contribution from residential development in 2026. The residential development segment has reported losses since 2024 due to weak market conditions. While uncertainty remains elevated given interest rate developments, geopolitical tensions and persistently high building costs, there are early signs of strengthening demand. However, we expect homebuyers to remain cautious in committing to new builds amid ongoing financial and geopolitical volatility. Accordingly, we anticipate only modest improvement in 2026, with a more significant recovery possible in 2027 or 2028 if macroeconomic conditions improve.
The delay in partially divesting two Fornebu projects to Thon Gruppen resulted in weaker-than-expected 2025 EBITDA, with nearly NOK 1bn now expected in 2026 instead. One project was completed on 30 Apr. 2026, while the other remains subject to regulatory approval. We have revised our assessment of financial ratios to reflect weaker-than-expected performance in 2024 and 2025, driven by lower EBITDA in both years and higher net debt in 2025 relative to our projections. We also factor in limited visibility of material improvement amid ongoing uncertainty in residential development and sector cyclicality.
Contributions from OBOS-banken and joint ventures have partially offset the impact of these delays on 2025 EBITDA and credit metrics, highlighting the value of the company's diversification during a period of weak demand for residential development projects. We believe the bank's current capital position allows for further support to credit metrics in 2026 and 2027 if market conditions remain subdued. However, we do not consider reliance on dividend income to be sustainable over the long term and expect residential development to re-emerge as a meaningful earnings contributor through 2028.
We view OBOS Eiendom as vital to the OBOS BBL group’s identity and future strategy. As a result, our long-term rating on OBOS Eiendom is aligned with our 'BBB-' long-term rating on OBOS BBL.
Stable outlook
The stable outlook reflects our expectation that the contracted divestments and the completion of housing projects will support near-term liquidity and ongoing investment. We expect improvement in residential development profitability in 2026, although performance remains exposed to weak market conditions. The outlook also assumes that management will align capital spending with market conditions and manage debt growth over the next few years. While we believe the company is well positioned to benefit from a recovery in the residential development market, the timing and strength of the recovery remain uncertain.
We could raise the rating to reflect improved credit metrics with EBITDA to net interest above 4x over an extended period, alongside improved stability and growth in cash flows, and the recovery of the residential development market.
We could lower the rating to reflect continued lack of recovery and profitability in the residential development segment or deteriorating credit metrics with value adjusted equity ratio below 60%. We could also lower the rating to reflect EBITDA to net interest approaching 1.5x.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB- | BBB- |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N3 | N3 |
| Senior unsecured issue rating: | BBB- | BBB- |
Contacts:
Anine Gulbrandsen, analyst, +4797501657, anine.gulbrandsen@nordiccreditrating.com
Sean Cotten, lead senior analyst, +46735600337, sean.cotten@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.