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CAPITAL GOODS: SKF (SKFBSS Baa1/NR/BBB+): Spin Off

CAPITAL GOODS
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Some uncertainty for bondholders on this but our base case is that ratings would not be impacted and expect limited spread movement for now.

  • SKF has announced plans to separate its Automotive business and spin it out to shareholders in 1H26 subject to shareholder approval.
  • It sees different business drivers in Automotive versus Industrial and believes the move will allow Automotive to adapt faster to changes in end markets.
  • The Industrial business represents 70% of revenue and 86% of operating income, with the rest in Automotive.
  • No details have been provided regarding capital structure of each entity post spin-off. We could see a situation where leverage increases, but margins improve, albeit with a loss of diversification and scale.
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Some uncertainty for bondholders on this but our base case is that ratings would not be impacted and expect limited spread movement for now.

  • SKF has announced plans to separate its Automotive business and spin it out to shareholders in 1H26 subject to shareholder approval.
  • It sees different business drivers in Automotive versus Industrial and believes the move will allow Automotive to adapt faster to changes in end markets.
  • The Industrial business represents 70% of revenue and 86% of operating income, with the rest in Automotive.
  • No details have been provided regarding capital structure of each entity post spin-off. We could see a situation where leverage increases, but margins improve, albeit with a loss of diversification and scale.