SBB (Samhällsbyggnadsbolaget i Norden AB) is a Swedish real estate company that owns public real estate across the Nordic region – including social housing, hospitals and schools.

The industry has faced difficulties as rates have risen.

Bonds trading well after tender offer in November

SBB’s bonds continue to perform relatively well – in part because of its use of tender offers.

SBB bought back EUR 417m of debt at around a 3% discount in November. It is now offering to buy back up to another EUR 250m of bonds.

Forcing investors to refresh their valuation

The tender offer helps support SBB’s bonds’ secondary prices. It adds a large buyer to the market – helping avoid a situation in which limited liquidity leads to bond price falls – which then results in panic and greater price level reductions.

It forces a large number of investors to do full analytics work on the securities – in order for them to decide whether to sell back their bonds in the tender offer.

This resulted in a much lower average discount (3%) for SBB’s buyback in November than expected.

Case study for other issuers

SBB’s voluntary offer program offers a case study for other issuers whose secondary prices are trading below where they believe they should be trading.

By adding themselves as a large additional buyer into the market, and forcing investors to do the fundamental analysis on their bonds, other issuers can use the same tools to support the secondary market trading of their securities.