Credit Risk Assessments of Swedish RealEstate Companies

Sammanfattning: The real estate industry is a sector where the companies generally have a capital structure which is high leveraged. The financing – with the related terms – is therefore specifically of high importance for the companies in the sector. Traditionally, the way of obtain financing is by borrowing from the bank. Lately, due to new bank regulations, the banks have become more restrictive in their lending which have lead to a growth of other financing alternatives. For instance, the corporate bond market has grown rapidly. The development has increased the number who acts as lenders. Institutional investors are for an example an actor which invests in corporate bonds. Furthermore, the credit rating agencies plays indirectly an important role in the financing process since their credit ratings are a part in the process of determining the terms. The terms (such as the interest rate) of the financing are mainly based on the credit risk of the company. Since the topic is of big importance and the financing for real estate companies is changing, the main focus is to create further knowledge and understanding regarding the assessments of the credit risk by each actor.  The present thesis shows the credit risk assessment process by each actor where the banks and the credit rating agencies have the most clear framework. The banks and the agencies do a deep assessment which then is discussed in "committees" internally to reach the final assessment.  The investor’s combines own analyses with evaluating earlier credit analysis done by a credit rating agency or a financial advisor in a corporate bond issue.