Fitch Affirms Region of Umbria's Credit-linked Notes at 'BBB+' on Sovereign Action

Fri May 2, 2014 11:42am EDT

(The following statement was released by the rating agency) MILAN/LONDON, May 02 (Fitch) Fitch Ratings has affirmed the Region of Umbria's EUR179.4m (originally EUR487.3m) 4.86% amortising notes due 2018 (ISIN: XS0156017955) at Long-term local currency rating 'BBB+'. The notes are credit-linked to the Italian sovereign. The rating action follows the affirmation of the Republic of Italy's ratings on 25 April 2014. The notes were issued on 21 November 2002 by the Region of Umbria in anticipation of funds to be provided by the Italian government for reconstruction following the 1997 earthquake in the region. These contributions (the payments) from the state have been agreed under Laws 488 of 23 December 1999 and 448 of 28 December 2001 and will be distributed until 31 December 2018 under a pre-set schedule. KEY RATING DRIVERS Due to an irrevocable payment delegation issued, according to the Italian Civil Code, by the Region of Umbria to the Italian Department for Civil Protection (the department), a division of the Central Government of the Republic of Italy, and following its acceptance by the department, the department is therefore legally bound to make these payments (which are equivalent to the scheduled issuer's two semi-annual instalments due on 30 June and 31 December) directly to the trustee (set up under a trust deed between the issuer and JP Morgan Chase Bank - London Branch) for the benefit of the noteholders. Following the payment delegation, which cannot be revoked by either the region or by the department once accepted by the department, the right to receive the payments has effectively been transferred from the region to the trustee for the benefit of the noteholders, and the payment obligations by the department constitute claims of the noteholders against the Republic of Italy. Therefore, payment obligations of the department constitute unsecured obligations of the Republic of Italy, ranking equally with all its other unsecured financial obligations. If the department fails to make any payments, the trustee, on behalf of the noteholders, will be entitled to enforce payments against the Region of Umbria acting as a back-up obligor. RATING SENSITIVITIES The ratings of the notes are sensitive to changes in the ratings of the Italian sovereign. On 25 April 2014, the Republic of Italy was affirmed at Long-term foreign and local currency Issuer Default Ratings (IDR) 'BBB+', with the Outlook revised to Stable from Negative (see 'Fitch Revises Italy's outlook to Stable, Affirms at 'BBB+'' on www.fitchratings.com). Contact: Primary Analyst Sergio Ciaramella Director +39 02 87 90 87 216 Fitch Italia SpA Via Morigi 6 - Ingresso Via Privata Maria Teresa, 8 20123 Milan Secondary Analyst Raffaele Carnevale Senior Director +39 02 87 90 87 203 Committee Chairperson Guilhem Costes Senior Director +34 93 323 84 10 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on 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 - Outside the United States here Additional Disclosure Solicitation Status null/gws/en/disclosure/solicitation?pr_id=828582 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.

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