SBB - comment

S&P’s downgrade of SBB to BB reflects concerns over sufficient liquidity to meet upcoming maturities. Our analysis assumed that the €750m of bank bond to bank facilities would be rolled. Instead, the facilities have just been repaid, leaving a significant shortfall vs upcoming maturities. We still expect SBB to seek 40% LTV in secured debt from its banks to roll its maturities out to 2027 whilst awaiting property yields to fall along with interest rates. The lenders will look to extract their pound of flesh, and the S&P rating move will have pushed costs higher. Obtaining the necessary facilities is feasible, albeit the cost will be significant. If SBB doesn’t secure bank facilities to refinance maturing debt, a restructuring or fire sale is inevitable. 

SBB was also forced to cancel the SEK2.63bn D Share issue as the share price fell to SEK9 vs an issue price of SEK16. SBB will save cSEK2.5bn of liquidity by postponing the dividend.