Obligation SKB 1.875% ( XS0827529198 ) en EUR

SKB

100 % ▲

Suede

XS0827529198 ( en EUR )

1.875% par an ( paiement annuel )

11/09/2019 - Obligation échue

Prospectus brochure de l'obligation SKF XS0827529198 en EUR 1.875%, échue

100 000 EUR

500 000 000 EUR

SKF est un fabricant mondial leader de roulements, joints et systèmes de lubrification, ainsi que de services associés.

L'Obligation émise par SKB ( Suede ) , en EUR, avec le code ISIN XS0827529198, paye un coupon de 1.875% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 11/09/2019

PROSPECTUS

AKTIEBOLAGET SKF
(a public company incorporated with limited liability in Sweden)
500,000,000 1.875 per cent. Notes due 11 September 2019
Issue price: 99.643 per cent.
The 500,000,000 1.875 per cent. Notes due 11 September 2019 (the Notes) are issued by Aktiebolaget SKF (the
Issuer).
The Issuer may, at its option, redeem all, but not some only, of the Notes at any time after 11 September 2012 at the
Make-Whole Redemption Price, together with any accrued interest. Also, the Issuer may, at its option, redeem all, but
not some only, of the Notes at any time at par plus accrued interest, in the event of certain tax changes as described
under the Conditions of the Notes. The Notes mature on 11 September 2019.
Application has been made to the Commission de Surveillance du Secteur Financier (the CSSF) in its capacity as
competent authority under the Luxembourg Act dated 10 July 2005 (the Luxembourg Act) on prospectuses for
securities to approve this document as a prospectus and to the Luxembourg Stock Exchange for the listing of the Notes
on the Official List of the Luxembourg Stock Exchange and admission to trading on the Luxembourg Stock Exchange's
regulated market. The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of
Directive 2004/39/EC (the Markets in Financial Instruments Directive).
References in this Prospectus to Notes being listed (and all related references) shall mean that such Notes have been
admitted to trading on the Luxembourg Stock Exchange's regulated market and have been admitted to the Official List
of the Luxembourg Stock Exchange. The CSSF assumes no responsibility for the economic and financial soundness of
the transactions contemplated by this Prospectus or the quality or solvency of the Issuer in accordance with Articles
7(7) of the Luxembourg Act. The Luxembourg Stock Exchange's regulated market is a regulated market for the
purposes of the Markets in Financial Instruments Directive (Directive 2004/39/EC).
The Notes will be rated A3 by Moody's Deutschland GmbH (Moody's) and A- by Standard & Poor's Credit Market
Services Europe Limited (S&P). Moody's and S&P are established in the European Union and are registered under
Regulation (EC) No. 1060/2009 (as amended). As such Moody's and S&P are included in the list of credit rating
agencies published by the European Securities and Markets Authority on its website in accordance with such
Regulation.
A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or
withdrawal at any time by the assigning rating agency.
The Notes will initially be represented by a temporary global note (the Temporary Global Note), without interest
coupons, which will be deposited on or about 11 September 2012 (the Closing Date) with a common safekeeper for
Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg).
Interests in the Temporary Global Note will be exchangeable for interests in a permanent global note (the Permanent
Global Note and, together with the Temporary Global Note, the Global Notes), without interest coupons, on or after 22
October 2012 (the Exchange Date), upon certification as to non-U.S. beneficial ownership. Interests in the Permanent
Global Note will be exchangeable for definitive Notes in bearer form, serially numbered in the denomination of
100,000 and integral multiples of 1,000 in excess thereof, up to and including 199,000, each with Coupons attached
on issue, only in certain limited circumstances - see "Summary of Provisions relating to the Notes while represented by
the Global Notes". No Notes in definitive form will be issued with a denomination above 199,000.
An investment in Notes involves certain risks. Prospective investors should have regard to the factors
described under the heading "Risk Factors" on page 6.
Joint Lead Managers
Commerzbank
Deutsche Bank
Skandinaviska Enskilda Banken AB (publ)
The Royal Bank of Scotland
The date of this Prospectus is 7 September 2012

This Prospectus comprises a prospectus for the purposes of Article 5.3 of Directive 2003/71/EC (the
Prospectus Directive) and for the purposes of the Luxembourg Act.
The Issuer (the Responsible Person) accepts responsibility for the information contained in this Prospectus.
To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case)
the information contained in this Prospectus is in accordance with the facts and does not omit anything likely
to affect the import of such information. The Board of Directors of the Issuer is, to the extent provided by
law, responsible for the information contained in this Prospectus and declares that, having taken all
reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of
its knowledge, in accordance with the facts and contains no omission likely to affect its import.
This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein
by reference (see "Documents Incorporated by Reference"). This Prospectus should be read and construed
on the basis that such documents are incorporated and form part of the Prospectus.
The Joint Lead Managers (as described under "Subscription and Sale", below) have not independently
verified the information contained herein. Accordingly, no representation, warranty or undertaking, express
or implied, is made and no responsibility or liability is accepted by the Joint Lead Managers as to the
accuracy or completeness of the information contained or incorporated in this Prospectus or any other
information provided by the Issuer in connection with the offering of the Notes. No Joint Lead Manager
accepts any liability in relation to the information contained or incorporated by reference in this Prospectus
or any other information provided by the Issuer in connection with the offering of the Notes or their
distribution.
No person is or has been authorised by the Issuer to give any information or to make any representation not
contained in or not consistent with this Prospectus or any other information supplied in connection with the
offering of the Notes and, if given or made, such information or representation must not be relied upon as
having been authorised by the Issuer or any of the Joint Lead Managers.
Neither this Prospectus nor any other information supplied in connection with the offering of the Notes (a) is
intended to provide the basis of any credit or other evaluation or (b) should be considered as a
recommendation by the Issuer or any of the Joint Lead Managers that any recipient of this Prospectus or any
other information supplied in connection with the offering of the Notes should purchase any Notes. Each
investor contemplating purchasing any Notes should make its own independent investigation of the financial
condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Prospectus nor
any other information supplied in connection with the offering of the Notes constitutes an offer or invitation
by or on behalf of the Issuer or any of the Joint Lead Managers to any person to subscribe for or to purchase
any Notes.
Neither the delivery of this Prospectus nor the offering, sale or delivery of the Notes shall in any
circumstances imply that the information contained herein concerning the Issuer is correct at any time
subsequent to the date hereof or that any other information supplied in connection with the Offering of the
Notes is correct as of any time subsequent to the date indicated in the document containing the same. The
Joint Lead Managers expressly do not undertake to review the financial condition or affairs of the Issuer
during the life of the Notes or to advise any investor in the Notes of any information coming to their
attention.

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IMPORTANT INFORMATION RELATING TO THE USE OF THIS PROSPECTUS AND OFFERS
OF NOTES GENERALLY
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy the Notes in any
jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The
distribution of this Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions.
The Issuer and the Joint Lead Managers do not represent that this Prospectus may be lawfully distributed, or
that the Notes may be lawfully offered, in compliance with any applicable registration or other requirements
in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for
facilitating any such distribution or offering. In particular, no action has been taken by the Issuer or the Joint
Lead Managers which is intended to permit a public offering of the Notes or the distribution of this
Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be
offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or other offering
material may be distributed or published in any jurisdiction, except under circumstances that will result in
compliance with any applicable laws and regulations. Persons into whose possession this Prospectus or any
Notes may come must inform themselves about, and observe, any such restrictions on the distribution of this
Prospectus and the offering and sale of Notes. In particular, there are restrictions on the distribution of this
Prospectus and the offer or sale of Notes in the United States, the United Kingdom and Sweden, see
"Subscription and Sale".
STABILISATION
IN CONNECTION WITH THE ISSUE OF THE NOTES, DEUTSCHE BANK AG, LONDON
BRANCH AS STABILISING MANAGER (THE STABILISING MANAGER) (OR PERSONS
ACTING ON BEHALF OF ANY STABILISING MANAGER) MAY OVER-ALLOT NOTES OR
EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE
NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL.
HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER (OR PERSONS
ACTING ON BEHALF OF A STABILISING MANAGER) WILL UNDERTAKE STABILISATION
ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH
ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS
MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER
THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS
AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. ANY STABILISATION ACTION
OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE RELEVANT STABILISING
MANAGER (OR PERSONS ACTING ON BEHALF OF ANY STABILISING MANAGER) IN
ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
The Notes may not be a suitable investment for all investors
Each potential investor in the Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor may wish to consider either on its own or with the help
of its financial and other professional advisers, whether it:
(i)
has sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits
and risks of investing in the Notes and the information contained or incorporated by reference in this
Prospectus or any applicable supplement;
(ii)
has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Notes and the impact the Notes will have on its
overall investment portfolio;

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(iii)
has sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,
including where the currency for principal or interest payments is different from the potential
investor's currency;
(iv)
understands thoroughly the terms of the Notes and is familiar with the behaviour of any relevant
indices and financial markets; and
(v)
is able to evaluate possible scenarios for economic, interest rate and other factors that may affect its
investment and its ability to bear the applicable risks.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as
amended, (the Securities Act) and are subject to U.S. tax law requirements. Subject to certain exceptions,
the Notes may not be offered, sold or delivered within the United States or to U.S. persons. For a further
description of certain restrictions on the offering and sale of the Notes and on distribution of this document,
see "Subscription and Sale" below.
PRESENTATION OF INFORMATION
All references in this document to U.S. dollars, U.S.$ and $ refer to the currency of the United States of
America, to euro and refer to the currency introduced at the start of the third stage of European economic
and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended, and to
Swedish Kronor and SEK refer to the currency of the Kingdom of Sweden.

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___________________________________
CONTENTS

Page
Risk Factors ........................................................................................................................................................6
Documents Incorporated by Reference ............................................................................................................14
Conditions of the Notes ....................................................................................................................................15
Summary of Provisions relating to the Notes while Represented by the Global Notes ...................................26
Use of Proceeds ................................................................................................................................................29
Description of the Issuer...................................................................................................................................30
Taxation............................................................................................................................................................51
Subscription and Sale .......................................................................................................................................54
General Information .........................................................................................................................................56
___________________________________

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RISK FACTORS
In purchasing Notes, investors assume the risk that the Issuer may become insolvent or otherwise be unable
to make all payments due in respect of the Notes. There is a wide range of factors which individually or
together could result in the Issuer becoming unable to make all payments due in respect of the Notes. It is
not possible to identify all such factors or to determine which factors are most likely to occur, as the Issuer
may not be aware of all relevant factors and certain factors which it currently deem not to be material may
become material as a result of the occurrence of events outside the Issuer's control. The Issuer has identified
in this Prospectus the following factors which could materially adversely affect its business and ability to
make payments due under the Notes.
In addition, factors which are material for the purpose of assessing the market risks associated with the
Notes are described below.
Prospective investors should also read the detailed information set out elsewhere in this Prospectus and
reach their own views prior to making any investment decision.
FACTORS THAT MAY AFFECT THE ISSUER'S ABILITY TO FULFIL ITS OBLIGATIONS
UNDER THE NOTES
Litigation, arbitration, antitrust proceedings and unanticipated claims
The Issuer is the parent company of the SKF group of companies (the Group). The Group is, and
may continue to be, involved in litigation and arbitration both as plaintiff and defendant. Many of these
disputes relate to claims arising in the ordinary course of business including, but not limited to, litigation
relating to intellectual property, product warranty and product liability. Unanticipated claims could have a
material adverse effect on the Issuer's business and results of operations.
SKF and other companies in the bearing industry are part of investigations by the European
Commission, the U.S. Department of Justice and the Korea Fair Trade Commission regarding a possible
violation of antitrust rules. SKF is fully cooperating with the authorities and is also performing its own
internal review. Moreover, SKF is subject to related class action claims by direct and indirect purchasers of
bearings in the United States and may face additional follow-on civil actions by both direct and indirect
purchasers.
It is likely that the European Commission will impose a fine on SKF. Given the nature of the
investigation, the amount of such fine is likely to materially affect the Group's results and cash flow. It is,
however, too early to assess when and to what extent such effect may occur and hence can be accounted for.
There can be no assurance that the Group will not become subject to additional legal proceedings,
which may have an adverse effect on the Issuer's business, financial position and results of operation.
Business risks in general/Changes in economic conditions
The Group operates in many different industrial and automotive segments, as well as in many
geographical segments with different business cycles. A general economic downturn at a global level, or in
one of the world's leading economies, or a change in the economic situation in any of the industry segments
in which the Group operates, could affect customers' investment plans which in turn could reduce the
demand for the Group's products, solutions and services for a period of time. In addition, terrorism, war,
unrest and other hostilities, as well as natural disasters (including but not limited to earthquakes, tsunamis
and ash clouds) and disturbances in the worldwide financial markets, could have a negative impact on the
availability of raw materials and components necessary for the Group's manufacturing process and/or the
demand for the Group's products and services. Under certain circumstances any of the risks identified above
could have a material adverse effect on the Issuer's business, financial position and results of operations.

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Political and regulatory risks

There are political and regulatory risks associated with the wide geographical presence of the Group.
Regulatory requirements, taxes, tariffs and other trade barriers, price or exchange controls or other
governmental policies could limit or otherwise negatively impact the Group's operations.
Competition

Competitive factors, including changes in market penetration, increased price competition, the
development and introduction of new products, product designs and technologies by significant existing and
new competitors and to a lesser extent small regional companies as well as changes in customer demand on
sales, product mix, prices and service quality could have a material adverse effect on the Issuer's business,
financial position and results of operations.

Also, the Issuer cannot give any assurance that its competitors do not or will not seek to utilise the
Issuer's patents, trademarks and logos when they market their products. Such unauthorised use of the Issuer's
intellectual property rights is an infringement of the Issuer's legal rights and may have a material adverse
effect on the Issuer's business and brand image.
Changes in manufacturing costs as well as issues affecting manufacturing and production facilities of the
Group or its suppliers and its ability to distribute its products

Changes in the costs associated with the Group's various levels of operations including, but not
limited to, the effects of unplanned work stoppages, severe interruptions in its production and damage to the
equipment, the cost of labour, and the cost and availability of, for example, materials and energy supply from
third party suppliers could have a material adverse effect on the Issuer's business, financial position and
results of operations.

If critical equipment in the operating facilities is significantly damaged, or there are severe
interruptions in its productions, the Group is likely to face setbacks in its ability to manufacture and
distribute its products. Such circumstances, to the extent it is unable to find an alternative manufacturing and
production facility or repair the damaged facilities or damaged equipment in a timely and cost-efficient
manner, could have a material adverse effect on the Group's business, results of operations and financial
condition.
Changes in costs for raw materials

The annual cost for raw materials and components is approximately SEK 17 billion, of which steel-
based products account for the majority. An increase/decrease of 1 per cent. in the cost of raw materials and
components would reduce/increase operating profit by approximately SEK 170 million. Steel scrap is a
major ingredient in making bearing steel. A 10 per cent. increase/decrease of market scrap prices would
affect the Group's operating profit by SEK 140 million, which is already included in the figure for raw
materials and components that impacts the operating profit. Calculations are based on the year-end figures
for 2011 as well as on the assumption that everything else is equal.
Property and product liability insurance
The Group has the customary insurance programmes with respect to the Group's property and
product liability risks. Measures to limit the effect of damages are continually taken and standards for desired
safeguard levels are established in order to reduce the probability of material damages and to ensure
deliveries to the customers. While the Group holds customary insurance programmes in the amounts the
Issuer believes to be appropriate, there can be no assurances that the Group will be able to fully recover such
amounts or that recovered amounts will be sufficient to cover the Group's losses.
IT Risks

The Group's operations are dependent on IT systems and solutions. Routines and procedures are
implemented to protect hardware, software and information from being damaged, manipulated, lost or
misused. A major break-down of these systems with loss of information may have a material adverse effect
on the Group's business, financial position and results of operations.

7

Retention of key employees

The Group has, and is dependent on, highly knowledgeable and skilled people and it works actively
on its ability to attract and retain its employees. Global processes have been developed for recruitment,
employee performance and the overall skills of employees. These processes will enable the Group to further
develop the skills within the Group to even higher levels. However, there can be no assurance that the Group
will be able to retain and attract all of the key employees that it requires and a lack of highly qualified
management and other skilled employees may have an adverse effect on the Group's business, financial
position and results of operation.
Work stoppages or strikes
Many of the Group's employees are covered by collective bargaining agreements. The Issuer cannot
provide any assurance that it will not encounter strikes or other disturbances occasioned by its unionised
labour force, or that, upon the expiration of existing agreements, it will be able to reach new collective
bargaining agreements on satisfactory terms or without work stoppages, strikes or similar industrial actions.
Non-satisfactory terms on any collective bargaining agreements could cause the Group's labour costs to
increase, which would affect its profit margins negatively. In addition, it is required to consult and seek the
advice of its Employee Works' Council in respect of a broad range of matters, which could delay or prevent
the completion of certain corporate transactions. While the Group has not experienced any major work
stoppages in recent years and expects its current process to proceed amicably, the Issuer cannot provide any
assurance that it will not experience lengthier consultations or even strikes, work stoppages or other
industrial actions in the future. Any industrial action could disrupt its operations, possibly for a significant
period of time, and result in increased wages and benefits or otherwise have a material adverse effect on the
Group's business, results of operations and financial condition.
Environmental matters
As an industrial company, the Group is subject to numerous environmental laws and regulations
governing, among other things, air emissions, waste water discharge and solid and hazardous waste disposal.
The Group has a stringent process for preventing environmental pollution from its manufacturing processes.
However, like other long-established industrial companies, the Group is involved in various action plans and
remediation projects, resulting from historical activities. Because of stricter laws and regulations, some with
retroactive effect, relating to landfill disposal, some of the Group companies are currently involved in the
cleaning-up of old landfills, most of which have not been used for many years. The majority of these cases
concern so-called superfund sites in the United States. A superfund site is an old landfill or plant site in the
United States with soil or groundwater contamination, subject to a remediation programme according to
federal law. In most of these cases the Group company was one of many companies contributing to waste
disposal at landfill sites in the past and the Group's share is generally very low (a few per cent. or less). Other
than this, a few ongoing remedial activities are being carried out in Italy for soil and groundwater
contamination. Although the Issuer believes that the ultimate resolution of these issues will not have a
material impact on its financial position, it can give no assurance that it will not have a material adverse
effect on the Group's business and results of operations. In addition, stricter environmental laws and
regulations, sometimes with retroactive effect, may lead to increased expenditure to comply with these laws
and regulations. Furthermore, accidental environmental pollution may also expose the Group to substantial
liability that could have a material adverse effect on the Issuer's results of operations.
Environmental provisions
The Group has made its best estimate of expected environmental provisions for a number of
locations and several superfund sites designated by the U.S. Environmental Protection Agency and U.S. state
agencies and the authorities in several other countries. Management believes that the ultimate resolution of
these issues will not have a material impact on the financial position or results of operations of the Group,
but no assurance can be given that actual costs will not exceed the estimates.

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Difficulties integrating acquired businesses and achieving anticipated synergies.

The Issuer cannot provide any assurance that it will not experience problems in relation to the
integration of acquired companies or that the expected synergies will be achieved within planned timeframes.
In addition, the Group may bear expenses and liabilities undisclosed in its due diligence and acquisition
processes. The Group cannot guarantee that the integration of acquired entities will occur within the planned
timeframes. Moreover, integration costs could be higher than initially anticipated and expected synergies
may not be fully achieved. The occurrence of any of the foregoing may have an adverse effect on the Group's
business, financial position and results of operations.
Financial risks
The operations of the Group are exposed to various types of financial risk. The Group's financial
policy defines the main risks as currency, interest rate, credit and liquidity risks and defines responsibility
and authority to manage them. The policy states that the objective is to eliminate or minimize risk and to
contribute to a better return through active risk management. The responsibility for risk management and
treasury operations are largely centralized to the SKF Treasury Centre, the Group's internal bank.
Currency risk
The Group is subject to both transaction and translation exposure. The Group's principal commercial
flows of foreign currencies pertain to exports from Europe to North America and Asia as well as intra-
European business. The Group hedges 75 per cent. of the estimated net U.S.$ exposure for three to twelve
months. At year-end 2011, the hedging with derivatives conformed to the Group's policy. Translation
exposure on Group accounts is hedged to some extent by borrowing in foreign currencies.

Translation exposure: A weakening/strengthening of 5 per cent. of the SEK versus all major
currencies has a positive/negative effect on the translation of the Group's profits in SEK of around
SEK 400 million. Most of the profit is made outside Sweden, meaning the Group is exposed to
translational risks from all major currencies.

Transaction exposure: A strengthening/weakening of 5 per cent. of the U.S.$ versus the SEK has a
positive/negative net currency flow effect on the Group's profit before tax of around SEK 300
million, excluding effects from hedging transactions. With regard to commercial flows, the Group is
primarily exposed to the U.S.$ and U.S.$-related currencies against SEK and EUR.
Interest rate risk
The Group defines interest rate risk as the risk of negative fluctuations in the Group's cash flow
caused by changes in the interest rates. Liquidity and borrowing are managed at Group level. By matching
the maturity dates of investments made by subsidiaries with the borrowings of other subsidiaries, the interest
rate exposure of the Group can be reduced. A decrease/increase of 1 per cent. in interest would have a
positive/negative effect on the Group's profit before tax of around SEK 70 million, based on the current
position. As at 31 December 2011 the Group has net interest bearing liabilities of SEK 15,604 million.
Holding company risk
The financial position of the Issuer, being the parent company, is dependent on the financial position
and development of its subsidiaries. A general decline in the demand for the products and services provided
by the Group could mean lower income for the parent company, as well as a need to write down the values
of the shares in the subsidiaries.
Price risks
As at 31 December 2011, the Group held investments in equity securities with quoted stock prices
amounting to SEK 385 million and is subject to risks associated with changes in stock exchange prices and
indexes. If the market share price had been 10 per cent. higher/lower as at 31 December 2011, equity would
have increased/decreased by SEK 39 million.

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Liquidity risk
Liquidity risk, also referred to as funding risk, is defined as the risk that the Group will encounter
difficulties in raising funds to meet its commitments.
Group policy states that, in addition to current loan financing, the Group should have a payment
capacity in the form of available liquidity and/or long-term committed credit facilities. In addition to its own
liquidity, as at 31 December 2011 the Group had committed credit facilities of EUR 500 million syndicated
by 10 banks that will expire in 2014 and committed credit facilities of SEK 3,000 million that will expire in
2017.
Credit risk
Credit risk is defined as the Group's exposure to losses in the event that one party to a financial
instrument fails to discharge an obligation. The Group is exposed to credit risk from its operating activities
and certain financing activities. With regard to financing activities, the Group's policy states that only well-
established financial institutions will be approved as counterparties. The majority of these financial
institutions have signed an ISDA agreement (International Swaps and Derivatives Association, Inc.).
Transactions are made within fixed limits and exposure per counterparty is continuously monitored.
At operational level, the outstanding trade receivables are continuously monitored locally in each
area. The Group's concentration of credit risk related to trade receivables is mitigated primarily because of its
many geographically and industrially diverse customers. Trade receivables are subject to credit limit control
and approval procedures in all subsidiaries.
The maximum exposure to credit risk for the Group amounted to SEK 17,036 million as at 31
December 2011. The exposure is represented by the total financial assets that are carried in the balance sheet
with the exception of equity securities. As at 31 December 2011, no granting of significant financial
guarantees increasing the credit risk and no significant collateral agreements reducing the maximum
exposure to credit risk existed.
General risks
Ratings downgrades may increase the Issuer's funding costs and substantially reduce the Issuer's earnings.
The long-term rating of the Group by S&P and Moody's is A- (since 2003) and A3 (since 2010). The
Issuer's credit rating depends on many factors, some of which are outside of the Issuer's control. If the Issuer
were to receive downgrades in its credit rating, it may become necessary to offer increased interest rates in
the capital markets in order to obtain financing, which would likely substantially lower the Issuer's profit
margins and earnings and negatively affect the Issuer's business and results of operations.
Factors which are material for the purpose of assessing the market risks associated with the Notes
Risks related to the Notes generally
Set out below is a brief description of certain risks relating to the Notes generally.
Meetings of Noteholders and Modification
The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters
affecting their interests generally. These provisions permit defined majorities to bind all Noteholders
including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a
manner contrary to the majority.

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