Nordic Credit Rating has affirmed its 'AA-' long-term issuer rating on Sweden-based shipping finance provider Svenska Skeppshypotekskassan (Skeppshypotek). The outlook is stable. The 'N1' short-term issuer rating was also affirmed, in accordance with NCR's revised financial institutions rating methodology. The ratings are no longer under criteria review.
Rating rationale
The long-term rating reflects Skeppshypotek's strong projected CET1 capital ratio of over 30.0%, a fully matched funding profile and its government-defined role in national shipping finance. The rating also considers the company's stable, cost-efficient earnings and loss performance track record, with no reported impaired or non-performing loans in the portfolio since 2018.
The rating is constrained by Skeppshypotek's significant exposure to the shipping sector and certain customer groups. These concentrations are permitted only through exceptions to regulatory large exposure limits. The rating is further limited by the inherent volatility of the shipping sector and the valuation of vessels used as loan collateral. Despite these concentrations, Skeppshypotek maintains a low risk appetite in other areas, as defined by the Skeppshypotek law.
We raise our standalone credit assessment to reflect Skeppshypotek's unique role in supporting the Swedish shipping industry and the high likelihood of extraordinary support given controlling ownership by the Kingdom of Sweden. In our view Skeppshypotek plays an important, though replaceable, policy role as a provider of financing for Swedish shipping.
Stable outlook
The stable outlook reflects the current relationship between Skeppshypotek and the Swedish government. It also reflects our view that Skeppshypotek's selective underwriting and low loan-to-value lending profile will help preserve credit quality despite volatility in the shipping industry. In addition, we expect Skeppshypotek to maintain a strong capital position, even as its loan book grows.
We could raise the rating if the entity's strategic policy role increases, if there is a stronger commitment to timely support from the Swedish government, or if single-name concentrations decline.
We could lower the rating if there is a change in government ownership or a reduced mandate to finance Swedish-related shipping. The rating could also be lowered if the common equity Tier 1 ratio falls below 18% on a sustained basis or if asset quality materially deteriorates.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | AA- | AA- |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N1 | N1 |
| Senior unsecured issue rating: | AA- | AA- |
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
The methodology documents used for this rating are NCR's Financial Institutions Rating Methodology published on 12 May 2025, 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.