London, 16 June 2015 -- Moody's Investors Service has today affirmed Kommuninvest i Sverige Aktiebolag's
and Kommunekredit's long-term issuer and senior unsecured
ratings at Aaa, with a stable outlook. Moody's has
also withdrawn their a1 baseline credit assessments (BCA) in conjunction
with the rating agency's decision to no longer applying the Banks
methodology to these institutions. Their ratings are now based
on guarantees from their regional and local government members,
in line with our methodology for Government-Related Issuers.
Refer to the end of this press release for a full list of today's
rating actions.
Please click this link for Moody's methodology for rating Government-Related
Issuers, published 30 October 2014: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_173845.
RATINGS RATIONALE
The affirmation of Kommuninvest's and Kommunekredit's Aaa/P-1
ratings is based on the joint and several guarantees that these institutions
receive from their respective regional and local government (RLG) customers/owners.
These guarantees are strong as the RLGs have close financial linkages
with their respective sovereigns.
--- KOMMUNINVEST
The affirmation of Kommuninvest's Aaa stable long-term ratings
is driven by the lender's strong linkages with Swedish RLGs,
which, in turn, derive their strong creditworthiness from
their close ties to the Swedish sovereign (Aaa stable). The link
between Kommuninvest and its RLG-customer-owners manifests
itself through a guarantee under which all RLG members in Kommuninvest
Cooperative Society are responsible for Kommuninvest's obligations
on a joint and several basis.
The strength of this guarantee is underpinned by (1) Swedish RLGs'
broad authority to levy income taxes on their generally wealthy population;
(2) Moody's view of RLGs' manageable debt levels at about
15% of GDP; (3) a nation-wide equalisation principle
ensures that all RLGs have the financial means to deliver public services
as mandated by the central government; and (4) regulation that requires
RLG budgets to be balanced within three years. In addition,
Sweden's Ministry of Finance oversees the sector, intervening
before severe financial challenges arise.
--- KOMMUNEKREDIT
The affirmation of Kommunekredit's Aaa stable long-term ratings
is based on a guarantee, under which its RLG-customer-members
are responsible for the agency's liabilities on a joint and several
basis. The guarantee is strong owing to the RLGs' close financial
linkages with the Danish sovereign (Aaa stable). As is the case
in Sweden, (1) Danish RLGs have the authority to levy income taxes
on their constituents; (2) municipal debt is manageable at around
6% of GDP; (3) a nation-wide equalisation principle
ensures that all RLGs have the financial means to deliver public services
as mandated by the central government; and (4) regulation requires
their budgets to be balanced within three years. In addition,
and like in Sweden, the Ministry of Economic Affairs and the Interior
oversees the sector, intervening before severe financial challenges
arise.
OUTLOOKS
The stable outlooks on Kommuninvest and Kommunekredit are based on the
stability of their guarantors.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Kommuninvest's and Kommunekredit's ratings would come under
pressure if the creditworthiness of, or the guarantee from its owner-customers
and member customers weakens in any way.
LIST OF AFFECTED RATINGS
Issuer: KommuneKredit
....Adjusted baseline credit assessment and
Baseline credit assessment, a1 Withdrawn
....Long-Term Issuer Rating ,
Affirmed Aaa Stable
....Senior Unsecured Regular Bond/Debenture,
Affirmed Aaa Stable
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Aaa
....Short-Term Medium-Term Note
Program, Affirmed (P)P-1
....Short-Term Commercial Paper,
Affirmed P-1
....Outlook, Stable
Issuer: Kommuninvest i Sverige Aktiebolag
.... Adjusted baseline credit assessment and
Baseline credit assessment, a1 Withdrawn
.... Long-Term Issuer Rating ,
Affirmed Aaa Stable
.... Backed Senior Unsecured Regular Bond/Debenture,
Affirmed Aaa Stable
.... Backed Senior Unsecured Medium-Term
Note Program, Affirmed (P)Aaa
.... Backed Short-Term Medium-Term
Note Program (Local Currency) , Affirmed (P)P-1
.... Backed Short-Term Commercial Paper
, Affirmed P-1
....Outlook, Stable
The principal methodology used in these ratings was Government-Related
Issuers published in October 2014. Please see the Credit Policy
page on www.moodys.com for a copy of this methodology..
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 rating action on the support provider and in relation to each particular
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 rating action, and
whose ratings may change as a result of this 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.
The following information supplements Disclosure 10 ("Information
Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J)
of SEC Rule 17g-7") in the regulatory disclosures made at
the ratings tab on the issuer/entity page on www.moodys.com
for each credit rating as indicated:
Moody's was not paid for services other than determining a credit
rating in the most recently ended fiscal year by the person(s) that paid
Moody's to determine this credit rating.
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.
Jan Skogberg
Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Sean Marion
Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's affirms ratings of Kommuninvest and Kommunekredit