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Announcement:

Moody's issues annual credit report on European Investment Bank

Global Credit Research - 20 Aug 2012

Frankfurt am Main, August 20, 2012 -- In its annual credit report on the European Investment Bank (EIB), Moody's Investors Service says that the EIB's Aaa/stable and Prime-1 ratings are based on the institution's very high intrinsic financial strength as well the very high level of support from its highly rated shareholders.

The rating agency's report is an annual update to the markets and does not constitute a rating action.

The EIB's intrinsic financial strength is rooted in (i) the bank's sound governance and prudent risk management; (ii) its very remote liquidity risk given its benchmark status in international capital markets, with a well-established yield curve and a diversified investor base, as well as its direct access to European Central Bank refinancing; (iii) strong capital adequacy and the high quality of its assets; (iv) the high quality of callable capital and its preferred creditor status; and (v) its continued profitability, which led to the build-up of a significant level of reserves.

In Moody's opinion the EIB's shareholders, the EU member states, have a very high ability and strong willingness to support the EIB. The very high ability is based on the EIB's weighted median shareholder rating of Aaa, which is Moody's main measure to gauge shareholders' ability of support. The strong willingness to support is based on (1) the EIB's vital role in the past, (2) during the current euro area sovereign crisis, and (3) in the EU's 'Europe 2020' growth strategy. In addition, Moody's views favourably the recent announcement to almost double the EIB's paid-in capital via a cash capital injection of EUR10 billion.

Rating downgrades in the context of the sovereign debt crisis in Europe have eroded the quality of EIB shareholder support. However, as of 1 August 2012, Aaa and Aa-rated member states still accounted for 66% of callable capital (EUR146 billion), and 22 out of the 27 member states were investment-grade rated (accounting for 97% of callable capital).

The EIB's loan portfolio, accounting for 84% of total assets, has withstood the euro area sovereign crisis, with impaired loans amounting to only 0.1% of total loans as of year-end 2011. Although the EIB's counterparty credit ratings have deteriorated, the loan quality, which takes additional credit enhancements into account, has deteriorated to a lesser extent.

Nevertheless, a severe deterioration in the euro area could have a negative impact on the EIB, mainly via three channels. Firstly, asset quality could be affected, mainly as a result of loan exposure to troubled EU countries and, to a limited extent, as a result of deterioration of the treasury portfolio. Secondly, the sovereign debt crisis could affect the willingness and the ability of members states (reflected by further rating downgrades) to support the EIB. Thirdly, funding conditions could tighten and, in a highly adverse scenario, market access could temporarily be limited.

Subscribers can access this report via this link: http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_144351.

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: London +44-20-7772-5456, New York +1-212-553-0376, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

Thorsten Nestmann
Asst Vice President - Analyst
Sovereign Risk Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Bart Oosterveld
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

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 issues annual credit report on European Investment Bank
No Related Data.

 

© 2014 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. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATION") 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. 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.

 


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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.

 


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MIS, 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 MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. 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 "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

 


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© 2014 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
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