Fitch Rates State of Bremen's EUR500m Bond 'AAA'

Wed Apr 23, 2014 10:55am EDT

(The following statement was released by the rating agency) LONDON/FRANKFURT/WARSAW, April 23 (Fitch) Fitch Ratings has assigned the State of Bremen's EUR500m 1.375% fixed interest rate bond (DE000A11QJW3), due 28 April 2021, a Long-term local currency rating of 'AAA'. This is Bremen's second issue to be rated by Fitch. The senior unsecured issue ranks pari passu with all Bremen's other outstanding debt. KEY RATING DRIVERS The rating reflects the strong mutual support mechanisms that apply to all members of the German Federation, including the State of Bremen, and the extensive liquidity facilities they benefit from, which ensure timely debt and debt service payment. 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 includes the State of Bremen undertaking this issue. All Laender are equally entitled to financial support in the event of financial distress irrespective of differences in economic and financial performances. The new EUR500m 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 Free Hanseatic City of Bremen is located in northern Germany and had a population of about 661,000 inhabitants at end-2012. The city-state is the smallest of the 16 German states and consists of the cities of Bremen and Bremerhaven. Its EUR27.7bn GDP accounted for almost 1% of national GDP in 2012. Its GDP per capita of EUR41,897 is the second highest among German states and 30% above Germany's average of EUR32,281. .RATING SENSITIVITIES A downgrade of the sovereign ratings could lead to a downgrade of the Laender and consequently the bond's rating. An adverse change of an important institutional feature (solidarity principle, equalisation system, liquidity exchange mechanism) would result in a review of the German Laender ratings. Contacts: Primary Analyst Guido Bach Senior Director +49 69 768076 111 Fitch Deutschland GmbH Taunusanlage 17, 60325 Frankfurt am Main Secondary Analyst Dorota Dziedzic Director +48 22 338 62 96 Committee Chairperson Christophe Parisot Managing Director +33 1 44 29 91 34 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria 'Tax-Supported Rating Criteria', dated 14 August 2012, and 'International Local and Regional Governments Rating Criteria', dated 9 April 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Tax-Supported Rating Criteria here International Local and Regional Governments Rating Criteria - Effective from 9 April 2013 – 23 April 2014 here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.