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Financing Environment

In 2023, the capital markets were hit by increasing volatility, changes in the interest rate environment and further geopolitical events and uncertainties. Market participants were forced to face these key challenges and refocus.

Central banks across the globe responded to historically high inflation witnessed in 2022 and 2023 by raising interest rates, putting an end to their loose monetary policy. After many years with interest rates close to 0%, the key rate hikes are affecting the capital markets. Interest rates have multiplied within a short space of time.

Starting in July 2022, the European Central Bank (ECB) implemented ten consecutive key interest rate hikes to 4.5% – the highest level seen since the start of monetary union back in 1999. In October, the ECB left interest rates in the eurozone unchanged for the first time. The ECB then went on to leave interest rates in the eurozone unchanged for the second time running in December.

Vonovia’s Public Bond Issue Volume Per Year (EUR bonds excl. convertible bonds)

Yields on ten-year German government bonds, which had been in negative territory for years, reached a level just under the 3% mark for the first time at the beginning of October. They then made a strong recovery at the end of the year and came in at 2.029% at the end of December.

The ECB also gradually tapered its asset purchases starting in March 2023. Since July 2023, funds from maturing securities as part of its Asset Purchasing Program (APP), introduced back in 2015 with a volume running into the trillions, have no longer been reinvested.

The US Federal Reserve (Fed) raised the key interest rate eleven times in a row since March 2022. In December 2023, the FED left its key rate unchanged for the third time in a row. It ranges from 5.25% to 5.50%.

The UK central bank, the Bank of England (BoE), also took a break for the first time in September 2023 after implementing 14 interest rate hikes in a row, starting at the end of 2022, leaving its key rate at 5.25%. This took the UK key rate to the highest level seen in 15 years. In December, the BoE kept interest rates steady for the third time running.

One of the World’s Biggest Capital Market Issuers

The rating agency Standard & Poor’s has assigned Vonovia SE and Deutsche Wohnen a long-term corporate credit rating of BBB+ and a short-term credit rating of A-2. The “BBB+ outlook stable” rating was confirmed in November 2023.

Spread Development (in Basis Points)

The Berlin-based Scope Group has also issued Vonovia SE a rating of A-. The outlook was changed from “stable” to “negative” in June 2023.

Moody’s became the third rating agency to publish ratings for Vonovia, with its first rating in May 2021. The “Baa1 outlook stable” rating is also an investment grade rating. The rating was last confirmed in January 2024.

Vonovia’s size and market position, increasing diversification across regulated residential real estate markets, strong competitive position, good access to the capital markets, broad mix of financing instruments and diversified maturity profile all contribute to Vonovia’s top-tier credit rating.

Following brisk primary market activity in the years from 2013 to 2022, Vonovia (incl. Deutsche Wohnen) was not on the EUR bond market for the first time in 2023, but nevertheless continues to rank among the top five euro-investment grade issuers in 2023 based on analyses performed by Dealogic. The refinancing requirement of just over € 3 billion was covered via the credit market. The secured banking market in particular is characterized by high demand and very attractive conditions.

At the beginning of 2023, and in line with a strategy of proactive management of financial liabilities, Vonovia implemented an open market repurchase (OMR) to buy back bonds maturing in 2028, 2029 and 2033. € 53.6 million was bought back early within this context.

Vonovia also successfully completed a cash offer for a number of bonds in July 2023. Out of the total nominal value offered by the bond investors amounting to approximately € 1.25 billion, Vonovia accepted bonds with a nominal value of € 1.0 billion for a total value of € 892.0 million. This corresponds to a discount of 11%.

Vonovia held its first Lenders Forum as a purely face-to-face event at its headquarters in Bochum on September 20, 2023. The event, which focused exclusively on ESG, was attended by 60 participants from 28 banks and insurance companies. The event was rounded off with a property tour of our energy center of the future in Bochum. The presentations held at the Lenders Forum can be downloaded online on the Investor Relations website