Fitch cuts Swedish SBB rating over tight liquidity, weak market
6:36 am Wednesday, November 22nd, 2023
By Louise Rasmussen
COPENHAGEN (Reuters) – Fitch on Wednesday downgraded Swedish property company SBB’s long-term issuer default rating to CCC+ from B-, and its senior unsecured debt rating to B from B+, driving the group’s bonds deeper into speculative or ‘junk’ territory.
Loss-making SBB is at the centre of a Swedish property crash, having racked up vast debt by buying public real estate, including social housing, government offices, schools and hospitals.
“The downgrades reflect SBB’s third quarter results and its tight liquidity, including insufficient existing liquidity to reduce refinancing risk after the end of the third quarter 2024, and unfavourable real estate and capital market conditions,” Fitch said in a statement.
“SBB continues to undertake asset disposals but execution risk remains high,” the ratings agency added.
SBB did not immediately respond to a request for comment.
Fitch already in May cut the group to below investment grade status for the first time and again downgraded the company in August.
Fitch on Wednesday said SBB was unlikely to have capital market access to refinance its unsecured bonds, adding that without an ability to tap bond markets, the real estate company would have to sell assets to meet debt maturities.
Rival ratings agency S&P on Friday said it had placed SBB on credit watch for a potential downgrade to a selective default over the company’s offer to use proceeds from a property sale to buy back debt for up to $650 million.
If debt is bought at a substantial discount to the original value, this could be considered tantamount to default, S&P said.
($1 = 10.4988 Swedish crowns)
(Reporting by Louise Breusch Rasmussen in Copenhagen, Marie Mannes in Stockholm, editing by Anna Ringstrom, Terje Solsvik and Bernadette Baum)
