Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's affirms European Union's Aaa rating; outlook stable

14 Sep 2018

Frankfurt am Main, September 14, 2018 -- Moody's Investors Service has today affirmed the European Union's (EU) long-term Aaa issuer rating, the Aaa senior unsecured ratings, the (P)Aaa senior unsecured MTN rating and the short term (P)P-1 rating and maintained the stable outlook.

The decision to affirm the rating reflects the following key rating factors:

(1) the very high strength of member support reflecting the significant credit strength of its most highly rated members and their commitment to ensure the continued soundness of the EU's finances;

(2) the EU's conservative budget management, and multiple layers of debt-service protection, including the potential recourse to additional member support on a timely basis if and when needed.

The stable outlook reflects the EU's very strong credit metrics, such as the relatively low level of outstanding debt when compared to annual budget revenues, and Moody's view that the EU's creditworthiness will be able to withstand any negative effects of the UK's exit from the EU.

Concurrently, Moody's has affirmed the European Atomic Energy Community's (Euratom) and the European Coal and Steel Community's (ECSC) Aaa/(P)Prime-1 ratings and maintained their stable outlooks. While Euratom and the ECSC are separate legal entities, their key credit characteristics are identical to the EU's. The European Commission (EC) borrows on behalf of Euratom and any debt repayment obligations are backed by the EU's budgetary resources and the EC's right to call for additional resources from member states if needed. The same applies for ECSC which has been in liquidation since 2001, but has some outstanding bonds that expire in 2019. Hence, both entities' ratings move in line with the EU's.

RATINGS RATIONALE

RATIONALE FOR THE AFFIRMATION OF THE Aaa RATING

FIRST DRIVER: VERY STRONG MEMBER SUPPORT AND THE SIGNIFICANT CREDIT STRENGTH OF THE EU'S MOST HIGHLY RATED MEMBERS

The first driver of the Aaa rating affirmation is the very high strength of member support and the significant credit strength of the EU's most highly rated members, committed to ensure the continued soundness of its finances. Moreover, Moody's notes improvements in EU member states creditworthiness. Since Moody's last rating action on the EU on 24 June 2016, the sovereign ratings of six member states have been upgraded; Ireland (A2 stable), Spain (Baa1 stable), Slovenia (Baa1 stable), Hungary (Baa3 stable), Cyprus (Ba2 stable) and Greece (B3 positive), whereas only one member state's sovereign rating has been downgraded, the United Kingdom (Aa2 stable). Similarly, outlooks on the sovereign ratings of nine EU member states have improved, compared to a deterioration in rating outlooks for four EU member states. Of particular importance, France, a key founding member and among the highly rated members now has a positive outlook on its Aa2 rating.

Approximately 30% of the total contributions (value-added tax (VAT)- and gross national income (GNI)-based, and traditional own resources) to the EU budget in 2018 come from members that are rated Aaa. Moreover, almost 66% of the total contributions to the EU budget come from members rated between Aaa and Aa3. This range includes among others, Germany (Aaa stable), the Netherlands (Aaa stable), Luxembourg (Aaa stable), France (Aa2 positive), and Belgium (Aa3 stable). Around 89% of the total contributions to the EU budget now come from countries with a stable or positive outlook, indicating in Moody's view the further improved resilience of member support.

SECOND DRIVER: CONSERVATIVE BUDGET MANAGEMENT AND MULTIPLE LAYERS OF DEBT-SERVICE PROTECTION

The second driver of the Aaa rating affirmation relates to the EU's conservative budget management and multiple layers of debt-service protection. Moody's views the EU's budget management as very conservative. According to Article 310 of the EU Treaty it must produce a balanced budget. The EU's borrowing for off-budgetary purposes carries multiple layers of debt-service protection, including: (1) back-to-back financing of loans extended to borrowers, with any debt service needs to be met using the proceeds of repayments by borrowing countries; (2) the EU's consistently strong cash balances that easily cover debt payment obligations even at their peak; (3) the flexibility to redirect around a third of budget expenditures (e.g. structural funds) to cover debt service if required; and (4) the margin between the maximum contributions by the member states and the actual resources that the EU requests from them, which constitute a significant additional buffer of resources that the EU can draw upon, in 2018 amounting to 0.22% of GNI or around €35 billion.

The EU's outstanding debt amounts to €52.8 billion as at end-August 2018, down from €54 billion at year-end 2017, and compared to a peak of €57.4 billion at the end of 2014. The EU borrows to on-lend to its member states through the European Financial Stabilisation Mechanism (EFSM) and Balance-of-Payments (BoP) financial assistance programmes, or to non-EU neighbouring countries through its Macro-Financial Assistance (MFA). Out of the total outstanding debt, the bulk (€46.8 billion) is related to financial assistance to Ireland and Portugal under the EFSM, for which the last repayments will fall due only in 2042, and maturities could be extended even further.

In particular, strong cash balances represent one of the EU's layers of protection. As of August 2018, the EU's treasury cash balance stood at €22.9 billion, and since July 2016 the monthly cash balance has not fallen below €10.9 billion, fully covering the EU's maturity repayment (includes capital and interest) peak year of 2021 of close to €10.9 billion. An additional layer of safety is that the EU has the flexibility to redirect part of the budget expenditures, amounting to around €50 billion (e.g. structural funds) to cover debt service if required.

According to Article 14 of the Council Regulation (EU, Euratom) No. 609/2014 that describes the measures to meet the EU's cash requirements, the EC has the legal right to draw on all member states in the event a borrowing country fails to repay its loan to the EU on time and that the EU's available cash resources are insufficient to cover debt service payments. In such an adverse event, according to Article 14 (4), the additionally required funds "shall be divided among the Member States, as far as possible, in proportion to the estimated budget revenue from each of them".

Additional supportive EU debt protection legislation includes Article 323 of the EU Treaty (Treaty on the Functioning of the European Union), 2016/C 202/1 which states that "the European Parliament, the Council and the Commission shall ensure that the financial means are made available to allow the Union to fulfil its legal obligations in respect of third parties." Moody's interprets this article such that EU member states are obliged to provide funds, potentially above and beyond their budgetary obligations, to meet all of the EU's obligations in respect to third parties.

Together, these protections are in Moody's view equivalent to a joint and several support framework.

Moody's also takes comfort from the timeliness of any additional contributions to be paid by the member states in case of need. According to Article 15 (1) of the above-mentioned Council Regulation the member states shall execute the EC's payment orders following the Commission's instructions and "within not more than three working days of receipt". Few other supranational entities and multilateral development banks have such clear and timely payment requirements.

RATIONALE FOR THE STABLE OUTLOOK

Moody's expects the EU's credit profile to remain very strongly supported by the current fiscal and financial framework, which is also reflected in very strong credit metrics. Despite the UK's exit from the EU planned to take place at the end of March 2019, Moody's does not expect that this will negatively affect either the capacity or the willingness of highly rated members to honour their obligations to the EU.

Although the UK is one of the key net contributors to the EU budget (12.5% of total contributions in 2018), its exit is not expected to have an impact on the EU's rating. According to the Draft Agreement on the withdrawal, the UK will contribute to the EU budget until 2020. The gap left in the EU's budget due to Brexit could be filled by the 27 remaining EU member states, budget cuts or a combination of both aforementioned measures. Excluding the UK's share, the cash balance, the budgetary resources as well as the margin to the own resources ceiling that the EU can call upon remain very significant layers of protection for the EU to fulfill its debt service obligations.

WHAT COULD CHANGE THE RATING - DOWN

Any potential weakening in the commitment of highly rated member states to the EU, or in the commitment of the EU's highly rated members to provide regular payments to the EU budget as well as extraordinary support, would lead to downward pressure on the Aaa stable rating, as would changes to the EU's fiscal framework that would lead to less conservative budget management. If the joint and several feature of the obligations of member countries vis-à-vis EU obligations are assessed to be weaker than previously anticipated, that will pose downward pressure on the rating. Other risks include a deterioration in the creditworthiness of highly-rated EU members. The EU's rating is particularly sensitive to changes in the ratings of the three countries rated Aaa to Aa2 that make large contributions to the EU budget, i.e., Germany, France, and the Netherlands.

LIST OF AFFECTED RATINGS

Affirmations:

..Issuer: European Union

....LT Issuer Rating, Affirmed Aaa

....Senior Unsecured Regular Bond/Debenture, Affirmed Aaa

....Senior Unsecured Medium-Term Note Programme, Affirmed (P)Aaa

....Other Short Term, Affirmed (P)P-1

..Issuer: European Atomic Energy Community

....LT Issuer Rating, Affirmed Aaa

....Senior Unsecured Regular Bond/Debenture, Affirmed Aaa

....Senior Unsecured Medium-Term Note Programme, Affirmed (P)Aaa

....Other Short Term, Affirmed (P)P-1

..Issuer: European Coal and Steel Community

....LT Issuer Rating, Affirmed Aaa

....Senior Unsecured Regular Bond/Debenture, Affirmed Aaa

....Senior Unsecured Medium-Term Note Programme, Affirmed (P)Aaa

...Other Short Term, Affirmed (P)P-1

Outlook Actions:

..Issuer: European Union

....Outlook, Remains Stable

..Issuer: European Atomic Energy Community

....Outlook, Remains Stable

..Issuer: European Coal and Steel Community

....Outlook, Remains Stable

Specific economic indicators as required by EU regulation are not applicable for these entities.

On 11 September 2018, a rating committee was called to discuss the rating of the European Union. The main points raised during the discussion were: The issuer's liquidity assessment and shareholder support have not materially changed. The issuer continues to enjoy multiple strong layers of debt-service protection.

The principal methodology used in these ratings was Multilateral Development Banks and Other Supranational Entities published in March 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Steffen Dyck
VP - Senior Credit Officer
Sovereign Risk Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Yves Lemay
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​
Moodys.com