The up to SEK 1,000m participating debenture issued by SBP Kredit II AB will finance the lending activity of sister fund SBP Kredit AB. SBP Kredit focuses on small bridge loans granted to Swedish real estate companies to develop and manage residential real estate. Svensk BostadsPartner AB is the main shareholder of SBP Kredit and SBP Kredit II as well as the asset manager.

The secured pool consists of 38 loans to 32 developers and sponsors for a total committed notional of SEK 1,345m, including SEK 801m drawn and currently fully financed by pari-passu and junior debts to the rated instrument. Credit enhancement stands at [36]%. The portfolio loan-to-gross-developed value stands at 58.4% and the covenanted look-through loan-to-value ratio at [31]%. The current weighted average remaining time to maturity is 11.6 months with a 9.46% weighted average margin. The rating benefits from the relatively granular portfolio and developer base, with the top loan representing 9.6% of the total committed portfolio, the short-term financing with an eight-month portfolio weighted

average life, significant excess spread of approximately 5.6% and a covenanted look-through loan-to-value ratio of 50%.
The rating is constrained by the exposure to construction risks and second-lien securities, lax replenishable portfolio guidelines and a rundown portfolio mechanism, a liquidity reserve that covers only six months of secured debt servicing, and the ability of SBP Kredit II to leverage up, which would result in a compression of the look-through loan-to-value ratio and credit enhancement to [50]% and [27]% respectively.

Scope analysts are available to discuss all the details surrounding the rating analysis, the risks to which this transaction is exposed and the ongoing monitoring of the transaction.

For this analysis, Scope applied its CRE Security and CMBS Rating Methodology (17 August 2021), General Structured Finance Methodology (14 December 2020) and Methodology for Counterparty Risk in Structured Finance (13 July 2021).

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

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