TEXT-S&P keeps Dexia Municipal Agency's covered bonds on watch neg
On Dec. 31, 2012, the Dexia group published a press release outlining a Jan. 31, 2013, deadline for the closing of the sale of Dexia Municipal Agency to a new government-sponsored bank, to which Dexia has referred in its publication as "Nouvel Etablissement de Credit" (NEC). NEC will be owned initially by the French state (AA+/Negative/A-1+; shareholding of 75%); Caisse des Depots et Consignations (CDC; AA+/Negative/A-1+; shareholding of 20%); and La Banque Postale (LBP; A+/Negative/A-1; shareholding of 5%). LBP will have an option to increase its shareholding to up to 33%. However, the French government will remain the majority shareholder through the combination of its direct shareholding and that of CDC. On Dec. 28, 2012, the European Commission granted approval for the proposed sale of Dexia Municipal Agency to NEC.
As part of the CreditWatch resolutions, we will review our assessment of Dexia Municipal Agency's creditworthiness. We expect to resolve the CreditWatch placements on Dexia Municipal Agency's public-sector covered bonds by Feb. 15, 2013. All else remaining the same, we would expect to cap the ratings at one notch above our assessment of the creditworthiness of Dexia Municipal Agency due to counterparty risk. The change to our assessment of DMA's creditworthiness is likely to be positive, and would therefore at least partially offset the negative rating impact of counterparty risk.
In our view, there remains execution risk in the proposed sale of Dexia Municipal Agency to NEC. If the sale does not take place within the announced timeframe, we will resolve the counterparty criteria element of the CreditWatch placements based on our current view of Dexia Municipal Agency's creditworthiness. This would result in a downgrade of five notches to 'A-', assuming all else remains the same.
RELATED CRITERIA AND RESEARCH
-- Counterparty Risk Framework Methodology And Assumptions, Nov. 29, 2012
-- Covered Bond Ratings Framework: Methodology And Assumptions, June 26, 2012
-- Covered Bonds Counterparty And Supporting Obligations Methodology And Assumptions, May 31, 2012
-- Global Investment Criteria For Temporary Investments In Transaction Accounts, May 31, 2012
-- Assessing Asset-Liability Mismatch Risk In Covered Bonds: Revised Methodology And Assumptions For Target Asset Spreads, April 24, 2012
-- Request For Comment: Methodology For Assessing Operational Risk In Structured Finance Transactions, Oct. 4, 2011
-- Nonsovereign Ratings That Exceed EMU Sovereign Ratings: Methodology And Assumptions, June 14, 2011
-- Principles Of Credit Ratings, Feb. 16, 2011
-- Advance Notice Of Proposed Criteria Change: Methodologies And Assumptions For Rating Certain Covered Bonds And CDOs, Aug. 5, 2010
-- Methodology: Credit Stability Criteria, May 3, 2010
-- Revised Methodology And Assumptions For Assessing Asset-Liability Mismatch Risk In Covered Bonds, Dec. 16, 2009
-- Understanding Standard & Poor's Rating Definitions, June 3, 2009
-- European Legal Criteria for Structured Finance Transactions, Aug. 28, 2008
-- CDO Spotlight: Rating Approach To Synthetic CDOs Of Sovereigns Or Local And Regional Governments, May 3, 2006
-- Covered Bond Monitor: Technical Note, Feb. 14, 2006
-- Surviving Stress Scenarios: Assessing Asset Quality of Public Sector Covered Bond Collateral, Sept. 30, 2003
-- Standard & Poor's Develops Criteria for Rating Obligations Foncieres, May 5, 2000
-- Credit FAQ: What's Behind The Updates To The Counterparty Risk Criteria Framework And Related Criteria?, Nov. 29, 2012
-- Various Rating Actions Taken On Eight European Covered Bond Programs Following Counterparty Criteria Update, July 12, 2012
Program/ To From
Country: Covered bond type
Ratings Remaining On CreditWatch Negative
Dexia Municipal Agency
AA+/Watch Neg AA+/Watch Neg
France: Legislation-Enabled Public-Sector Covered Bonds (Obligations Foncieres)
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