The affirmation follows a debt exchange into subsidiary SBB i Norden Holding and the subsequent withdrawal of legal proceedings brought by a sole hedge fund bondholder regarding an alleged breach of the interest coverage covenant in 2022.

Scope has obtained sufficient clarity on the implementation of SBB’s strategic review process to resolve the under-review status.

Scope downgrades SBB’s senior unsecured debt to CCC from B- due to reduced recovery expectations.

Weaker leverage and interest coverage, slow progress on the strategic review, liquidity and governance concerns and the dependence on asset sales to fund short-term debt obligations drive the downgrade.

The drivers of the downgrade are: deteriorating interest coverage; restricted access to capital and investment markets paired with SBB’s dependence on asset sales to fund short-term debt obligations; and limited visibility on the future portfolio.

The downgrade is driven by weaker interest coverage due to bond step-ups and the higher finance costs expected in the wake of SBB’s strategic review. The under-review status reflects uncertainty caused by the possible sale of all or part of SBB.

The Outlook change to Stable from Negative reflects an expected improvement in credit metrics following the spin-off of an education portfolio into a joint venture

The ratings affirmation is driven by the company's low-risk business model. The revised Outlook reflects a deterioration in credit metrics and uncertainty in the portfolio cleanup in a weakening market environment.

The ratings are driven by the Swedish real estate company’s low-risk business model, with strong asset quality and excellent tenants providing stable, predictable cash flows.