Frankfurt am Main, July 24, 2012 -- Moody's Investors Service has today changed to negative from stable the
outlooks on the long-term ratings of six L?nder and one government-related
issuer (GRI) in Germany, and on five GRIs in the Netherlands.
The ratings on all the above sub-sovereign entities remain unchanged.
The outlook change was prompted by Moody's recent decision to change
to negative from stable the outlooks on the sovereign ratings of Germany
and the Netherlands, as announced on 23 July, given the strong
correlation between sub-sovereign and sovereign credit risk,
as reflected in macroeconomic and fiscal linkages, institutional
factors and financial market conditions.
For full details of the correlation between sub-sovereign and sovereign
credit risk, please refer to Moody's Special Comment published on
15 February 2012. (http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_139829).
For additional information on Sovereign ratings, please refer to
the webpage containing Moody's related announcements http://www.moodys.com/eusovereign
.
A full list of affected ratings is included at the end of this press release.
RATINGS RATIONALE
GERMAN SUB-SOVEREIGNS - RATIONALE FOR OUTLOOK CHANGE
Affected entities: Baden-Wuerttemberg, Bavaria,
Berlin, Brandenburg, North-Rhine Westphalia,
Saxony-Anhalt, Erste Abwicklungsanstalt (GRI).
The negative outlook on the L?nder mirrors the corresponding change
of outlook on the German sovereign. The extremely strong financial
and operational linkages between the central government and German L?nder
imply a high correlation between the credit standing of the German federal
government and that of the L?nder. These linkages arise from
(i) the country's very robust equalisation system; (ii) the
solidarity principle (Bundestreue) anchored in the German constitution,
according to which all German L?nder and the Federal Republic are
committed to mutual support in the event that one of them faces severe
financial pressures; and (iii) the budgetary coordination and the
debt-brake mechanism enshrined in the constitution. In addition,
the very high debt stocks and refinancing needs of the German L?nder
expose them to the same market conditions as the sovereign; and the
equalisation system means that the L?nder and the federal government
are similarly exposed to the impact of broad macroeconomic conditions
on L?nder budgetary positions.
GERMAN SUB-SOVEREIGNS - WHAT COULD CHANGE THE RATINGS UP
/ DOWN
Given that the negative outlooks on German L?nder mirror the negative
outlook on Germany's sovereign rating, downward ratings pressure
on all German L?nder would likely be prompted by a deterioration
in the creditworthiness of the sovereign. Additionally, any
issuer-specific risks that might emerge would exacerbate downward
ratings pressure.
Conversely, a stabilisation of the outlooks or upward rating pressure
for German L?nder would require a stabilisation of the sovereign
rating, or evidence of a given entity's capacity to display
comparatively stronger credit fundamentals than peers.
The ratings of the German GRI, Erste Abwicklungsanstalt, are
directly linked to the creditworthiness of Land North-Rhine Westphalia,
based on the strength of the guarantee mechanism provided.
DUTCH GRIs - RATIONALE FOR OUTLOOK CHANGE
Affected entities: Bank Nederlandse Gemeenten N.V.
(BNG), Nederlandse Waterschapsbank N.V. (NWB),
Stichting Waarborgfonds BVE (WBVE), Stichting Waarborgfonds Eigen
Woningen (WEW) and Waarborgfonds Sociale Woningbouw (WSW).
The negative outlooks on Dutch GRIs mirror the negative outlook on the
Netherlands' sovereign rating. The financial and operational linkages
between the central government and Dutch specialised lenders (BNG and
NWB) are reflected in the robust policy interest of the central government
in the activities of these entities, given their role in providing
efficient funding to the sub-sovereign sector.
The financial and operational linkages between the central government
and Dutch guarantee funds (WBVE, WEW, WSW) reflect strong
government support for the sectors benefiting from guarantee funds (housing
associations, homeowners and further education). WSW and
WEW feature robust direct support mechanisms through which the Dutch government
is committed to intervene if needed. In the case of WBVE,
Moody's notes the strong indirect link to the Dutch government,
through WBVE's power to call capital from its almost exclusively
government-funded members in relation to their annual government
appropriations.
DUTCH GRIs - WHAT COULD CHANGE THE RATINGS UP/DOWN
Given that the negative outlooks on Dutch GRIs mirror the negative outlook
on the Netherlands' sovereign rating, a downgrade of the Netherlands'
sovereign ratings would likely result in a downgrade of all affected GRIs
based on the strong linkages and supportive structure. In all cases,
a weakening of ownership or support structure, or an alteration
in the risk profile of the sectors in which they operate could exert downward
pressure on the ratings.
A stabilisation of the outlooks or upward rating pressure for Dutch GRIs'
ratings would require a stabilisation of the sovereign rating.
RATINGS AFFECTED
-GERMAN REGIONAL AND LOCAL GOVERNMENTS (RLGs)
-Baden-Wuerttemberg Aaa long-term ratings
-Bavaria Aaa long-term ratings
-Berlin Aa1 long-term ratings
-Brandenburg Aa1 long-term ratings
-North-Rhine Westphalia Aa1 long-term ratings
-Saxony-Anhalts Aa1 long-term ratings
-GERMAN GRI
-Erste Abwicklungsanstalt (EAA) Aa1 long-term ratings
-DUTCH GRIs
-Bank Nederlandse Gemeenten N.V. (BNG) Aaa long-term
ratings
-Nederlandse Waterschapsbank N.V. (NWB) Aaa long-term
ratings
-Stichting Waarborgfonds BVE (WBVE) Aa1 long-term rating
-Stichting Waarborgfonds Eigen Woningen (WEW) Aaa long-term
rating
-Waarborgfonds Sociale Woningbouw (WSW) Aaa long-term rating
RATING METHODOLOGIES USED
The principal methodologies used in rating German RLGs were Regional and
Local Governments Outside the US published in May 2008, and The
Application of Joint Default Analysis to Regional and Local Governments
published in December 2008. The principal methodology used in rating
German and Dutch GRIs was Government-Related Issuers: Methodology
Update published in July 2010. Please see the Credit Policy page
on www.moodys.com for a copy of these methodologies.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant 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 relevant 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.
The ratings of rated entities Baden-Wuerttemberg, Land of
and Bavaria, Free State of were initiated by Moody's and were not
requested by these rated entities.
Rated entities Baden-Wuerttemberg, Land of and Bavaria,
Free State or their agent(s) participated in the rating process.
These rated entities or their agent(s), if any, provided
Moody's access to the books, records and other relevant internal
documents of the rated entities.
The ratings have been disclosed to the rated entities or their designated
agents and issued with no amendment resulting from that disclosure.
Information sources used to prepare the rating(s) for German RLGs and
GRIs are the following: parties involved in the ratings, parties
not involved in the ratings, public information, confidential
and proprietary Moody's Investors Service information, and confidential
and proprietary Moody's Analytics information.
Information sources used to prepare the rating(s) for Dutch GRIs are the
following: parties involved in the ratings, parties not involved
in the ratings, public information, and confidential and proprietary
Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings 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.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entities or their related third parties within
the two years preceding the credit rating action. Please see the
special report "Ancillary or other permissible services provided
to entities rated by MIS's EU credit rating agencies" on the
ratings disclosure page on our website www.moodys.com for
further information.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
to the SEC an ownership interest in MCO of more than 5%.
A member of the board of directors of this rated entity may also be a
member of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see for each issuer the ratings tab on the issuer/entity page on
www.moodys.com for the last rating action and the rating
history. The date on which some ratings were first released goes
back to a time before Moody's ratings were fully digitized and accurate
data may not be available. Consequently, Moody's provides
a date that it believes is the most reliable and accurate based on the
information that is available to it. Please see the ratings disclosure
page on our website www.moodys.com for further information.
The below contact information is provided for information purposes only.
Please see the issuer page on www.moodys.com for Moody's
regulatory disclosure of the name of the lead analyst and the office that
has issued the credit rating.
The relevant Releasing Office for each rating is identified under the
Debt/Tranche List section on the Ratings tab of each issuer/entity page
on moodys.com
Andrea Wehmeier
Vice President - Senior Analyst
Sub-Sovereign Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
David Rubinoff
MD - Sub-Sovereigns
Sub-Sovereign Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's changes outlook to negative on German and Dutch sub-sovereigns following outlook change on sovereign ratings
