German large residential property owner Vonovia has announced its intention to acquire its peer, Buwog, through a €5.3 billion cash transaction. The acquisition's funding will temporarily weaken Vonovia's credit metrics, but to levels that remain acceptable for the current rating. We are therefore affirming our 'BBB+/A-2' ratings on Vonovia and our 'BBB-' rating on its subordinated debt. The stable outlook reflects our view that Vonovia will likely successfully integrate Buwog while maintaining EBITDA interest coverage above 2.0x and debt-to-debt plus equity at less than 60%. On Dec. 19, 2017, S&P Global Ratings affirmed its 'BBB+/A-2' long- and short-term corporate credit ratings on German residential property company Vonovia SE. The outlook is stable. At the same time, we affirmed our 'BBB+'
