Financing Environment
High levels of inflation and volatility were still the dominant influences on the capital market in 2023. 2024 brought significant changes following the period of investor restraint and risk adjustment in the form of high interest rates. Real estate is sought-after again, at least in the risk-adverse asset classes such as residential real estate, which was reflected in successful order books and attractive interest coupons. In line with this trend, Vonovia was active on the British pound sterling and Swiss franc markets for the first time, and also placed a bond on the Euro market again after an absence of more than a year.
The key rate set by the European Central Bank (ECB) was negative for eight years – before it was raised to 0.0% in July 2022 in response to rising inflation. It continued to rise gradually until September 2023, reaching a peak of 4.0% (deposit rate), which overshot the previous high of 3.75% seen in October 2000. In June 2024, the ECB Governing Council opted to do an about-turn on interest rates and lowered the key interest rate again for the first time. This move was followed by three further interest rate cuts of 0.25% each, most recently in December, when the deposit rate was lowered to 3.00%.
In 2024, the yield on German government bonds with a ten-year term averaged around 2.34%. This puts the annual yield on German government bonds above the 2 % p. a. mark, as in 2023.
Vonovia’s Bond Issue Volume Per Year
In September 2024, the US Federal Reserve (Fed) lowered its key interest rate by 0.5 percentage points to a corridor of between 4.75% to 5.00% for the first time since the outbreak of the COVID-19 pandemic. This was followed by two further key interest rate cuts of 0.25 percentage points each in November and December 2024, putting the key rate in a range between 4.25% and 4.50%.
The Bank of England (BoE) also initiated an interest rate turnaround in 2024 and lowered its key interest rate by 0.25 percentage points to 5% in August, the first such move since 2020. A second key rate cut by 0.25 percentage points followed in November, bringing the rate down to 4.75%. In December, the BoE announced that it would be keeping the key rate steady at 4.75%.
One of the World’s Biggest Capital Market Issuers
The rating agency Moody’s has published an investment grade rating for Vonovia of “Baa1 outlook stable”. The rating was last confirmed in February 2025.
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 August 2024.
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.
Spread Development (in Basis Points)
Fitch became the fourth rating agency to publish ratings for Vonovia, with its first rating in March 2024. The “BBB+ outlook stable” rating is also an investment grade rating. The rating was last confirmed in February 2025.
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.
The company’s first-class credit rating continues to give it unrestricted access to the international capital markets. Vonovia was active on various capital markets a total of six times in 2024, and issued the following bonds with a total issue volume equivalent to around € 1.8 billion:
1. The company’s first bond denominated in pound sterling with a volume of GBP 400 million and a term of 12 years had already been issued back in January.
2. In February, Vonovia issued its first bond in Swiss francs with a volume of CHF 150 million and a term of five years.
3. April saw the issue of a social EUR bond with a volume of EUR 850 million and a term of ten years.
4. In June, Vonovia issued a social bond in Swedish krona with a volume of SEK 750 million and a term of two years as part of a private placement.
5. In August, we issued our second bond denominated in Swiss francs with a volume of CHF 235 million and a term of seven years.
6. Finally, in September, Vonovia issued a second bond in Swedish krona with a volume of SEK 500 million and a term of four years.
The volume-weighted average interest cost, after hedging, of the new bonds comes to 4.29% in 2024, with a weighted average maturity of 9.2 years.
Taking the EUR bond issue volume of € 850 million in 2024 alone (2023: no activity on the EUR bond market), Vonovia (incl. Deutsche Wohnen) ranks, according to an analysis by Dealogic, among the top 10 EUR investment grade issuers based on the total issue volume for the years from 2014 to 2024 (2023: top 5 EUR investment grade issuers for the period from 2013 to 2023).
Vonovia has stepped up its creditor relations activities considerably in recent years. In order to further diversify its investor base, Vonovia took part in various debt conferences and organized debt roadshows in Europe, Asia and Australia.