Fabege hedges interest in its loan portfolio

Fabege hedges interest in its loan portfolio

 

On the basis of the current low rates of long-term interest, Fabege has
chosen to hedge some of the interest rates of its loan portfolio by
entering interest-swap agreements totalling SEK 5 billion. The interest
hedging comprises about 30 per cent of the total loan portfolio. The
agreements entered have the following terms:

  · SEK 1.0 billion at three years
  · SEK 1.5 billion at five years
  · SEK 1.5 billion at seven years
  · SEK 1.0 billion at ten years

The interest-swap agreements mean that Fabege will pay a fixed annual
rate of interest for the terms stated above of between 2.18 per cent and
2.73 per cent, excluding margin. 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 for Fabege.

In addition, Fabege has extended its existing closable swaps of SEK 2.7
billion for a further three years. The extensions will result in a
reduction in interest expense of approximately 1 per cent in the swaps
in question, which means that Fabege's interest expense will decline by
about SEK 27m per year through 2013.

“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,” says 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 AB (publ)

For further information, please contact:
Christian Hermelin, CEO, phone 46 (0)8 555 148 25, 46 (0)73 387 18 25
Åsa Bergström, Deputy CEO and CFO, phone 46 (0)8 555 148 29, 46 (0)70
666 13 80