Moody's assigned Fabege AB a first-time Baa3 long-term issuer rating, with a stable outlook.

The rating was attributed to the Swedish commercial real estate company's moderate leverage and strong position in its home market, in particular the size, quality and location of its 57.9 billion-Swedish-kronor portfolio. Moody's expects Fabege to continue to improve the quality of its portfolio and move toward sustainable long-term growth through its large and mostly pre-let development pipeline.

Moody's also noted the company's high proportion of secured debt to the rating agency's adjusted total assets of 28.8%, as well as a low but improving share of unencumbered assets. It added that Fabege's short-dated dependence on commercial paper substantially weakens its liquidity.

The stable outlook reflects Moody's expectation that Fabege will improve its liquidity, boost its unencumbered assets to at least 30% and refinance 4.3 billion kronor in capital market funding, as well as a 2 billion-kronor credit facility.

Moody's anticipates the company's cash flow and EBITDA will rise as developments are completed and occupied, leading to an improved net debt to EBITDA ratio of about 14x in the next 12 months.

As of Feb. 15, US$1 was equivalent to about 7.96 Swedish kronor.