Stockholm-listed property company Fabege has entered interest-swap agreements totalling SEK 5 bn (EUR 548 mln) to hedge some of the interest rates on its loan portfolio.
Stockholm-listed property company Fabege has entered interest-swap agreements totalling SEK 5 bn (EUR 548 mln) to hedge some of the interest rates on its loan portfolio.
Fabege said it had chosen to enter the swaps because of the current low rates of long-term interest. The interest hedging comprises about 30% of the total loan portfolio.
Fabege will pay a fixed annual rate of interest for the terms stated above of between 2.18% and 2.73%, excluding margins. Since long-term interest rates are in line with the short three-month STIBOR (Stockholm Interbank Offered Rate), the interest-hedging at the current time will not imply any increased expense, the company said.
In addition, Fabege has extended its existing closable swaps of SEK 2.7 bn for a further three years.
'The historically low level of long-term interest rates motivates long-term fixed rates, while at the same time, the cash flow in the liability portfolio is improved,' said Åsa Bergström, deputy CEO and CFO Fabege. 'The lower level of risk generated by the fixed interest rates creates greater security and flexibility for the future.'
Fabege manages about SEK 28 bn of commercial property, concentrated on the Stockholm region.
