(The following statement was released by the rating agency)
Oct 10 - Fitch Ratings has assigned Laender 41's EUR1.0bn bonds, due 11 October 2019, a final 'AAA' Long-term rating. The bonds will be issued by a group of six German federated states (Laender). This is the 41st joint issue of the German Laender and the 28th to be rated by Fitch.
The rating reflects the strong support mechanisms that apply to all members of the German Federation, including the six German federated states involved in the joint issue, and the extensive liquidity facilities they benefit from, which ensure timely debt and debt service payment.
Fitch notes that the support mechanisms apply uniformly to all members of the German Federation: the Federal Republic of Germany ('AAA'/Stable/'F1+') represented by the federal government (Bund) and the 16 federated states, which include the six states undertaking the issue: Bremen , Hamburg, Mecklenburg-Vorpommern , Rheinland-Pfalz , Saarland and Schleswig-Holstein . All Laender are equally entitled to financial support in the event of financial distress irrespective of differences in economic and financial performances.
Each state is liable for its individual share in the issue, the proceeds of which will be divided between the participating states as follows:
State of Bremen: EUR170m State of Hamburg: EUR170m State of Mecklenburg-Vorpommern: EUR150m State of Rheinland-Pfalz: EUR170m State of Saarland: EUR170m State of Schleswig-Holstein: EUR170m
The State of Hamburg will be the paying agent. The issue's liquidity is underpinned by the safe cash management system the Laender operate in, which allows overnight cash exchanges between Laender and the Bund when necessary, and recourse to appropriate short-term credit lines. The issue is zero risk-weighted and European Central Bank repo-eligible.
The objective of the Laender's jumbo joint issue is to offer investors a sizeable and liquid bond with portfolio exposure on several issuers.
Link to Fitch Ratings' Report: Laender 41