Nordic Credit Rating said today that it had affirmed its 'BBB+' long-term issuer rating on Sweden-based Svensk FastighetsFinansiering AB (publ) (SFF). The outlook is stable. At the same time, the 'N-1+' short-term issuer rating and the 'BBB+' senior secured issue ratings were affirmed.
Rationale
The long-term rating reflects the company's commitment to and role for its five owners, the company's low risk appetite, the creditworthiness and continuous support provided by its owners, and the security available for senior secured bondholders. The rating also reflects the relatively long average remaining lease term and the high occupancy rates of the properties in the pledged portfolio, as well as the stable operating environment.
These strengths are partially offset by a somewhat high net loan-to-value (LTV) ratio for the rating level, at 48% as of 31 Dec. 2021, and the company's short debt maturity profile, with large maturities concentrated in single years and quarters. Furthermore, the rating is constrained by the high tenant concentration in the portfolio.
Stable outlook
The stable outlook reflects our expectations of stable performance by both SFF's property segments and its owners. We see net LTV being maintained around historical levels and the company's risk appetite remaining low, given the restrictions in SFF's MTN prospectus. Furthermore, we expect SFF to remain an attractive funding source for its five owners and its current ownership to stay unchanged. We could raise the rating to reflect: a sustainable reduction in NCR-adjusted net LTV to below 45%; an improvement in portfolio quality and/or a greater proportion of pledged residential properties; or a greater number of pledged properties, together with improved tenant diversification. We could lower the rating to reflect: an increase in risk appetite or changes to/non-compliance with covenants; a deterioration in the creditworthiness or withdrawal of one or more of the owners; or an increase in NCR-adjusted net LTV to above 55% over a protracted period.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB+ | BBB+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N-1+ | N-1+ |
| Senior secured issue rating: | BBB+ | BBB+ |
Contacts:
Marcus Gustavsson, analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@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.