SBB, the landlord at the center of Sweden’s commercial property crisis, saw its issuer default rating downgraded five steps to B- by Fitch Ratings with a warning that more cuts could be on the way.
The move against Samhallsbyggnadsbolaget i Norden AB — as the company is formally known — didn’t go as far as fellow rating firm S&P Global Ratings, which last month lowered its credit grade on the company to CCC+ with a negative outlook.
The latest downgrade by Fitch reflected SBB’s deteriorating cash position “stemming from insufficient progress” on asset sales, as well as unfavorable real estate and capital-market conditions, Fitch said in a statement after market close on Monday.
SBB is racing to address a self-identified cash shortfall of 8.1 billion kronor ($740 million) over the next 12 months. The company has suffered a spate of rating cuts since losing its investment grade status in early May, and has since put itself up for sale and continued to seek ways to lighten its balance sheet amid falling property valuations and a dearth of buyers in the transaction market.
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Fitch said it expects to resolve its “rating watch negative” on SBB when there’s news on raising sufficient liquidity, particularly as the company approaches its February 2024 bond maturities totaling 6.8 billion kronor.
A management shakeup may be under way as Chief Financial Officer Eva-Lotta Stridh on Friday announced she was leaving the firm after seven years in the role. Stridh is among the first high-profile resignations under Leiv Synnes, who was brought in 11 weeks ago after its founder was ousted as CEO amid a slump in SBB’s share price and concern over its ability to manage an $8 billion debt pile.
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Stridh had helped oversee the expansion of its debt and asset base during the era of ultra-low rates, but that business model began to unravel earlier this year following a jump in interest rates and investor concern over its ability to service its debt.
