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01 Dec 2009
Prime-1 short term rating remains unchanged
Paris, December 01, 2009 -- Moody's Investors Service today affirmed the backed long-term rating
of Aa1 on eligible debt securities issued under the guarantee agreement
signed by the governments of Belgium, France and Luxembourg and
Dexia SA on 9 December 2008 and extended for a one-year period
until 31 October 2010 via the addendum signed by the same parties on 14
The backed long-term rating of Aa1 is a pass-through of
the rating of the Kingdom of Belgium, reflecting the fact that the
debt securities issued by Dexia SA, Dexia Banque Internationale
à Luxembourg, Dexia Bank Belgium and Dexia Crédit
Local and their financing vehicles covered by the agreement are guaranteed
on a several but not joint basis by the Kingdom of Belgium (rated Aa1/P-1),
the Republic of France (Aaa/P-1) and the Grand Duchy of Luxembourg
(Aaa/P-1) in the respective proportions of 60.5%,
36.5% and 3% per guaranteed obligation and up to
a total commitment of EUR100 billion.
The outlook on the backed long-term rating is stable, in
line with Moody's stable outlook on the ratings of the Kingdom of
Belgium. The ratings of Dexia's guaranteed and non-guaranteed
short-term obligations remain unchanged at Prime-1.
The European Commission (EC) temporarily authorised the prolongation of
the guarantee scheme for a four-month period until the end of February
2010 or until a definitive decision on state aid in favor of Dexia and
its restructuring is made by the EC, should that decision be taken
before then. However, the extension remains formally subject
to the approval of the Luxembourg and French parliaments, which
Moody's expects to occur in December 2009, with retroactive
effect. As mentioned above, the renewal agreement has already
been signed by the Belgian, French and Luxembourg governments.
Any further extension of the guarantee scheme will be dealt with in the
EC's definitive ruling on Dexia's restructuring and state
Pursuant to the prolongation agreement, the following changes were
made to the initial guarantee scheme:
1. Eligible securities covered by the guarantee must be issued
before 31 October 2010 with a maximum maturity of four years (versus a
maximum maturity of 31 October 2011, previously);
2. The overall cap on outstanding guaranteed debt was lowered to
EUR100 billion from EUR150 billion, with Dexia committed to maintain
the aggregate outstanding guaranteed debt to no more than EUR80 billion.
Subordinated debt, hybrids and secured instruments remain excluded
from the scope of the guarantee.
Moody's believes that the exclusion, as from 16 October 2009,
of all new contracts with a maturity of less than one month or with an
indefinite term significantly reduces the operational risk related to
Dexia's ability to monitor the outstanding amount of guaranteed
liabilities under the initial agreement (please refer to our press release
of 13 January 2009). Furthermore, Moody's positively notes
that the above changes were made with the objective of Dexia limiting
the state intervention to a minimum and progressively exiting from the
guarantee scheme in an orderly and timely fashion.
In that respect, Moody's observes that the guaranteed debt
outstanding has been reduced from a peak of EUR95 billion in May 2009
to EUR56 billion currently, i.e. representing less
than 10% of Dexia's balance sheet. In addition,
Moody's acknowledges the overall improvement in Dexia's liquidity
position, which the rating agency continues to monitor closely,
alongside the bank's ability to diversify its funding sources and
recover its access to non-guaranteed financing sources over the
past few months.
The last rating action on Dexia Group's main banking entities was on 19
January 2009, when Moody's downgraded the bank financial strength
ratings (BFSRs) of Dexia Crédit Local, Dexia Bank Belgium
and Dexia Banque Internationale à Luxembourg to D+ (negative
outlook) from C-. In addition, the three entities'
long-term debt and deposit ratings were downgraded to A1 (negative
outlook) from Aa3.
The principal methodologies used in rating the issuers affected by this
press release are "Bank Financial Strength Ratings: Global Methodology"
and "Incorporation of Joint-Default Analysis into Moody's Bank
Ratings: A Refined Methodology", which can be found at www.moodys.com
in the Rating Methodologies sub-directory under the Research &
Ratings tab. Other methodologies and factors that may have been
considered in the process of rating these issuers can also be found in
the Rating Methodologies sub-directory on Moody's website.
Dexia SA, headquartered in Brussels, had total assets of EUR651
billion at year-end 2008. Dexia SA also recorded a net loss,
group share, of EUR3.3 billion for the full year.
For the first nine months of 2009, the group reported a net profit,
group share, of EUR808 million, up from a net loss of EUR723
million during the equivalent period of 2008.
Vice President - Senior Analyst
Financial Institutions Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's affirms backed Aa1 long-term rating on Dexia's guaranteed debt securities
Financial Institutions Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
No Related Data.
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