The financial situation of SATO is good. The principals of our financing are written in the SATO finance policy and approved by the Board. To secure the continuity of the operations we are aiming for an equity ratio in excess of 35 per cent calculated on fair value. In accordance with the financial policy, fixed-rate loans are kept at over 60 per cent of all loans.
For the strategy period 2017-2020 we have set as a target that 60 per cent or more of our assets shall be unencumbered. We were already able to reach this goal during the third quarter of 2017.
During 2020, SATO increased the proportion of unsecured loans to 82.6 per cent of all loans. At the end of the year, the proportion of unencumbered assets was 84.1 per cent of the balance sheet.
During the the first half of 2019, we established a Euro Medium Term Note (EMTN) programme, under which we issued EUR 350 million in unsecured bonds in May. The order book for the bonds was well oversubscribed, based on which we decided to increase the size of the bond issuance from a planned EUR 300 million to EUR 350 million. The cash proceedings were used to repurchase SATO’s EUR 300 million bonds issued in 2016 and EUR 300 million bonds issued in 2015. This operation improved the Group’s average maturity of the loan portfolio, decreased future finance costs and helped to manage the refinancing risk.
In 2020, SATO issued the first green bond under its Euro Medium Term Note (EMTN) programme. The cash proceeds received from the EUR 350 million unsecured bond will be used to finance and/or refinance Eligible Green Assets as per SATO’s Green Finance Framework.
To ensure better availability of financing and diversified funding sources, SATO has acquired a public credit rating and entered the international corporate bond markets.
We are determined to continue expanding our financing structure. Diversified financing supports our strategic goals and profitable housing investments and strengthens our risk management.