Financing
Pandox is dependent on a combination of shareholders' equity and external debt to finance its business, and is subject to various financial risks.
Well-proven financing strategy
- Well-proven financing strategy built on long-term relationships with banks and shareholders
- Equity and mortgage-backed bank loans are Pandox’s sources of financing
- No market financing in the form of bonds/hybrids and no external rating requirements
- Given Pandox’s business model, mortgage-backed bank loans are the most effective and predictable source of financing
Key debt ratios
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| Loan to value, % | 46.6 | 46.7 | 49.8 | 48.7 | 46.0 |
| Interest coverage, times | 2.7 | 3.7 | 2.1 | 1.9 | 3.9 |
| Average cost of debt, % | 4.2 | 3.1 | 2.5 | -2.6 | -2.6 |
| Net interest bearing debt, MSEK | 32,190 | 32,334 | 31,159 | 29,007 | 29,191 |
| Sustainability-linked loans, MSEK | 2,200 | - | - | - | - |
Debt maturity structure
per 31 December 2023
Financial risk management
Pandox's financial risk management ensures that risks are handled according to policy and within the risk limits as defined and decided by the board of directors.
Pandox seeks to achieve the lowest possible financing cost while simultaneously limiting the Company’s interest rate, currency and liquidity risks. Pandox’s approach is that increased financing cost resulting from moderate changes in interest rates is often compensated for by higher operating income due to increased economic activity. Also, Pandox has a loan portfolio with staggered maturities and fixed interest periods where the Company enters into interest rate swaps to hedge interest rate levels for a certain portion of the debt portfolio.
A significant amount of Pandox’s operations are in countries outside Sweden and the Company is therefore exposed to exchange rate fluctuations. Pandox reduces currency exposure in foreign investments primarily by taking out loans in local currencies. In general, foreign operations report both income and costs in the local currency, which limits currency exposure in current flows.
Pandox aims to have a diversified loan portfolio in terms of the number of lenders, concentration and maturities in order to manage liquidity risk.