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Supranationals

Global Home > Supranationals
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What is the Cost to Sovereigns of Support to Supranational Entities

Please join Rachel Cros from Fitch’s Global Investor Development team as she interviews Eric Paget-Blanc, Head of Development Finance Research, about the cost to global sovereigns of providing support to supranational institutions they control.

 

Listen now

rating action

Fitch Upgrades IIB's Short-Term IDR to 'F1', Removes from UCO

Fitch has upgraded IIB's ST rating as a result of the application of its updated ST Rating Criteria. Under the revised criteria IIB's 'BBB+' Long-Term (LT) IDR is on a new cusp point. Fitch has applied the higher of the two options mapping to the 'BBB+' LT IDR, as IIB's liquidity assessment of 'aa-' is higher than 'a', the minimum liquidity assessment at which the higher option would apply at the 'BBB+' cusp point. 

rating action

Fitch Upgrades GIC's ST Rating to 'F1'; Affirms LT Rating at 'BBB+'/Stable

GIC's 'BBB+' rating is driven by the support Fitch believes the institution would receive from its six sovereign shareholders: Saudi Arabia (A+/Stable), Kuwait (AA/Stable), Qatar (AA-/Stable), Oman (BB+/Stable), Bahrain (BB-/Stable) and the United Arab Emirates (UAE). Fitch assesses GIC's support rating at 'bbb+', based on the weighted average 'A-' rating of its shareholders, which is then adjusted down by one notch to reflect a 'moderate' propensity to support. 

rating action

Fitch Affirms Asian Development Bank at 'AAA'; Outlook Stable

The affirmation reflects AsDB's intrinsic credit quality with solvency and liquidity both assessed at 'aaa'. Fitch deems AsDB's business environment as 'low' risk, which would translate into a one-notch positive adjustment to the lower of our liquidity and solvency assessments if either of these were to fall below 'aaa'.  

rating action

Fitch Affirms African Development Bank at 'AAA'; Outlook Stable

AfDB's 'AAA' rating is driven by the extraordinary support it receives from its shareholders, which Fitch assesses at 'aaa'. The rating is also supported by AfDB's intrinsic assessment, which Fitch has revised up to 'aa' from 'aa-' previously. The revision is driven by an improvement in Fitch's assessment of the bank's business environment, which no longer leads to a one-notch negative adjustment to the intrinsic assessment.

No Impact on MDB Ratings from Recent Turkey Sovereign Downgrade

Turkey's sovereign rating downgrade last month does not affect the ratings of multilateral development banks (MDB), even for those with large Turkish operations. Further deterioration in the Turkish sovereign rating or macroeconomic environment could weigh on asset quality metrics but MDBs are diversified lenders and this could be mitigated or offset by improvements elsewhere in their loan books.

rating action

Fitch Affirms European Investment Bank at 'AAA'; Stable Outlook

The rating of EIB reflects its intrinsic credit quality that is primarily based on its 'aa' solvency and liquidity assessments. The 'low' risk business environment of the bank provides an uplift of three notches over the solvency and liquidity assessments, resulting in a 'aaa' overall intrinsic assessment.

EU, EIB Ratings Are Resilient to a No-Deal Brexit

The European Union and the European Investment Bank's 'AAA'/Stable ratings would not be affected by a no-deal Brexit. The EIB is expected to benefit from full replacement of the UK's capital, while short-term risks to the EU budget are manageable.

IIB HQ Move Highlights Shift Towards CEE Lending

International Investment Bank's decision to move its headquarters to Budapest from Moscow highlights its continued expansion into Central and Eastern Europe, Fitch Ratings says. The relocation could strengthen our assessment of IIB's operating environment and strategy, while a EUR200 million capital increase could support our assessment of its public mandate.

Webcast Replay: Preferred Creditor Status

Listen to our on-demand webcast led by Eric Paget-Blanc, Senior Director, Sovereign Ratings on multilateral development banks’ comparative advantage.

PCS Key Advantage for MDBs; Strength Differs Among Institutions

Preferred creditor status (PCS) is a key advantage for multilateral development banks (MDBs). However, it is weaker for regional multilateral development banks (MDBs) in particular those operating in Middle East and African, than for European and sub-regional MDBs.

Supras' Metrics Weaken as Loans Grow Faster than Capital

Weakening capitalisation and profitability in recent years have started to challenge supranational institutions' credit profiles. We expect credit metrics to stabilise, but this will partly depend on shareholders' willingness to provide additional capital.

Budget Proposal Supportive for EU, Cohesion Funds to Fall

The European Commission's proposal for the next Multiannual Financial Framework would support the creditworthiness of the European Union ('AAA'/Stable) despite the negative impact of Brexit on EU funding.

CEMAC Zone Boosts External Buffer, Faces Fiscal Challenge

The regional central bank, BEAC, has taken a critical role in efforts to adapt to lower oil prices. A 50bp increase in the policy rate last year has contributed to lower imports, as has BEAC's move to stop providing financing to CEMAC member governments. 

Emerging Europe Sovereign Credit Overview

The ramp-up of disbursements of EU funds and the strengthening of key western European trade partners are bolstering growth in central and eastern Europe. Domestic demand is also robust, supported by easy monetary conditions and falling unemployment, while tourism is benefiting from adverse security conditions in competitor markets. 

Rating Action

Asian Infrastructure Investment Bank Assigned 'AAA'; Outlook Stable

The ratings of AIIB are based on its existing and expected intrinsic strengths. Created in 2015, AIIB has been endowed with a substantial capital base which will support the projected rapid expansion in lending; exposure to risk will be mitigated by a comprehensive set of policies and by high quality governance.

Contacts

Global

James McCormack

Analytical Group Head

+44 20 3530 1286

Global

Tony Stringer

Analytical Chief Operating Officer

+44 20 3530 1219

Global

Jose Santos

Business Group Head

+34 93 323 9044

EMEA

Béatrice Hue

Business

+33 1 44 29 91 72

North America

Kathleen Holtzman

Business

+1 212 908 9103

Global

Eric Paget-Blanc

Head of Development Finance Research

+33 1 44 29 91 33

Global

Arnaud Louis

Head of Supranational Ratings

+33 1 44 29 91 42

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