Nordic Credit Rating (NCR) said today that it had raised its long-term issuer rating on Sweden-based community service property manager Offentliga Hus i Norden AB (publ) (Offentliga Hus) to 'BBB-' from 'BB+'. The rating was removed from Watch, where it was placed with positive implications on 18 Mar. 2021. The outlook is stable. At the same time, NCR raised its short-term issuer rating to 'N-1+' from 'N-1'.
Rationale
The upgrade reflects an increase in the company's ownership by Samhällsbyggnadsbolaget i Norden AB (publ) (SBB), whose stake amounted to 98.0% as of 3 May 2021. We expect a compulsory share redemption to lead to 100% ownership and that SBB will merge Offentliga Hus' operations into its own. An application by SBB to delist Offentliga Hus' shares from the First North Premier Growth Market was approved by NASDAQ on 30 Apr. 2021 and the last trading day was 14 May 2021. On 3 May 2021, SBB announced that it had invoked compulsory redemption of the remaining shares not acquired in its original tender offer, giving it full control over Offentliga Hus.
Since SBB has a stronger credit profile than Offentliga Hus, we view its full ownership as supportive of the latter's financial profile and creditworthiness as well as its outstanding obligations and liquidity position. To reflect our expectation that SBB would support Offentliga Hus in the event of need, we adjust the stand-alone credit assessment upward by two notches. This is a one notch increase relative to our previous assessment of SBB's ownership. The raising of the short-term rating reflects our view that SBB has the means to provide additional liquidity support to Offentliga Hus.
Stable outlook
The stable outlook reflects our expectation that Offentliga Hus will be merged into SBB's operations. As SBB has a stronger credit profile than Offentliga Hus, we view the increased ownership stake as positive for the latter's credit profile. The outlook further reflects our expectation that the community service property sector in Sweden will remain stable, and that the merged entity will continue to operate within this segment. We could raise the rating to reflect a strengthening of SBB's credit profile. We could lower the rating to reflect a weakening of SBB's credit profile, or reduced parental support for Offentliga Hus.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB- | BB+ |
| Outlook: | Stable | |
| Watch: | Watch Positive | |
| Short-term issuer credit rating: | N-1+ | 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 Rating Principles published on 16 Sep. 2019 and NCR's Corporate Methodology published on 14 Aug. 2018. For the full regulatory disclaimer please see the rating report.