London, 15 February 2012 -- Moody's Investors Service has today taken action on 83 European sub-sovereigns,
comprising regional and local governments (RLGs) and government-related
issuers (GRIs).
Today's actions on European sub-sovereigns were triggered
by (i) Moody's recent actions on the respective European sovereign
ratings; and (ii) the strong correlation between sub-sovereign
and sovereign credit risk, reflected in macroeconomic and fiscal
linkages, institutional factors and financial market conditions.
Please click on this http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_139806
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and identifies each affected issuer.
For full detail of analytical considerations leading to this action,
please refer to our dedicated Special Comment 'Key Drivers of Moody's
Rating Actions on European Sub-sovereign Ratings' http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_139829.
For full details on sovereign actions, please refer to the webpage
containing all of Moody's related announcements http://www.moodys.com/EUSovereign.
RATINGS RATIONALE
The rating actions on sub-sovereigns vary by country and range
from the assignment of negative outlooks, to downgrades of up to
two notches. Moody's has primarily assigned negative outlooks
to sub-sovereign credits in the UK, France and Austria,
while downgrades have primarily been implemented in Spain, Italy,
Portugal and Slovakia.
The magnitude of Moody's actions on European sub-sovereign
ratings broadly reflects the scale of the sovereign actions and the relative
position of the credits on the rating scale. In some countries,
the lowest ratings remain unaffected, as they display greater tolerance
within their rating categories.
The strong correlation between sub-sovereign and sovereign credit
risk is based on the following factors:
1.) Macroeconomic and fiscal linkages: A bleak economic outlook
in Europe negatively affects sovereign fiscal positions, which in
turn influences -- to varying degrees -- RLG
and GRI budgets through slower revenue growth and/or cuts in transfers
driven by national austerity measures.
2.) Institutional factors: European national governments
retain a high degree of control over the sub-sovereign sector via
legislation. In most countries, sub-sovereigns are
required to contribute to national fiscal consolidation efforts by implementing
their own austerity measures.
3.) Financial market conditions: Sub-sovereigns are
not insulated from market conditions that affect a sovereign's access
to debt capital markets, nor from subsequent negative developments
in the relevant banking systems.
Taken together, these factors reinforce linkages between sovereigns
and their respective sub-sovereigns.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Moody's believes that upward ratings pressure on the European sub-sovereigns
affected by today's action is unlikely to develop in view of the
challenging operating environment and weakened sovereign credit conditions.
Downward ratings pressure on the affected European sub-sovereigns
would be prompted by further deterioration of the respective sovereigns'
creditworthiness. Additionally, any sector or issuer-specific
risks emerging in this context would exacerbate downward ratings pressures.
Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_139806
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and provides, for each of the credit
ratings covered, Moody's disclosures on the following items:
* Rationale for review
* Methodologies
* Unsolicited ratings
* EU Participation in unsolicited ratings
* National Scale Ratings
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.
Some ratings were initiated by Moody's and were not requested by the rated
entities.
Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_139806
for the List of Affected Credit Ratings for the specific designation of
unsolicited ratings.
Some rated entities or their agents participated in the rating process.
The rated entities or their agents provided Moody's access to the
books, records and other relevant internal documents of these rated
entities. Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_139806
for the List of Affected Credit Ratings for the specific designation of
participating issuers in unsolicited ratings.
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 ratings 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.
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.
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 in "Debt/deal
box" on the Ratings tab in the Debt/Deal List section of each issuer/entity
page of the Website. A link from the Releasing Office name is provided
to lead to the full address of the respective MIS Releasing Office.
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 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.
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.
Thomas Amenta
Senior Vice President
Sub-Sovereign 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
David Rubinoff
MD - Sub-Sovereigns
Sub-Sovereign 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 takes action on European sub-sovereigns following action on sovereign ratings
