S&P lifts Industrivarden

Standard & Poor’s said it raised the long-term corporate credit rating on Industrivarden AB to A from A-, along with its short-term rating to A-1 from A-2.

The agency also said it affirmed the company’s K-1 short-term Nordic regional scale rating.

The outlook is stable.

The upgrades follow the company’s recent earnings release, which includes a new debt policy stating that the loan-to-value ratio should be in the range of 0 to 10%, compared with the actual level of about 15% as of year-end 2015, S&P said.

Although the policy allows for periodical deviations from the target, the agency said it thinks this is a strong indication that the company’s risk tolerance has decreased and will lead to debt reduction over time.

Management also announced a revision to its dividend policy, which implies lower dividend payouts, allowing for positive cash flow before changes in the asset portfolio, S&P said.

These strengths are partly offset by the company’s modest asset diversification, stemming from relatively large exposure to Svenska Handelsbanken, the agency said.

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