S&P downgrades SBB to junk

S&P said it lowered its ratings for Samhallsbyggnadsbolaget i Norden AB and its senior unsecured debt to BB+ from BBB-. The agency also cut the ratings on the subordinated hybrid bonds to B+ from BB and assigned a 3 recovery rating to the senior unsecured debt.

The agency noted that SBB’s credit metrics did not improve adequately in first-quarter 2023 after it closed the transaction with Brookfield, resulting in S&P Global Ratings-adjusted debt to debt plus equity remaining at a high 59.9% versus 63.3% at Dec. 31, 2022 and EBITDA interest coverage declining to 2.1x (rolling 12 months [RTM] figure).

“We take into account the company´s commitment to deleverage, its intention to undertake a rights issue of SEK2.637 billion, and potential further asset disposals of SEK 6 billion in the next couple of months. However, we believe that SBB will not be able to reduce debt to debt plus equity to well below 60%. In addition, higher refinancing costs will likely weigh negatively on the company´s EBITDA interest coverage,” S&P said in a press release.

The outlook is negative.

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