TEXT-S&P:Rtgs unchanged on Eurohypo AG's covered bonds

Fri Apr 13, 2012 7:18am EDT

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(The following statement was released by the rating agency)

Apr 13 - Standard & Poor's Ratings Services said today that its credit ratings are unchanged on Eurohypo AG's mortgage-sector covered bonds (AAA/Stable/A-1+) and public-sector covered bonds (AAA/Negative/A-1+).

On March 30, 2012, the European Commission (EC) changed its requirement for the sale of Eurohypo AG into a required run-down of the company. As a result, Eurohypo AG has to wind down its state financing business and non-core commercial real estate financing business, which will both be separated from its core commercial real estate financing business. Another condition of the EC's decision is Eurohypo AG's implementation of a EUR25 billion commercial real estate volume limit until the end of 2015, including EUR5 billion of annual new business.

At this time, we do not consider that the EC's aforementioned decision will affect our view on the creditworthiness of the two covered bond programs. Based on our current information, we expect Eurohypo AG's covered bonds to wind down as the bonds pay off, which we believe will happen over the longer term, as about EUR10 billion of the issuances have 10+ year maturities.

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