(Repeat for additional subscribers)
June 3 (The following statement was released by the rating agency)
Fitch Ratings has assigned HSH Finanzfonds
AoeR's EUR500m floating rate bonds, due 17 June 2019, an expected Long-term
rating of 'AAA(EXP)'. The two German federated States of Hamburg
(AAA/Stable/F1+) and Schleswig-Holstein (AAA/Stable/F1+) have explicitly and
irrevocably guaranteed the issue.
The final rating is contingent upon the receipt of final documents conforming to
information already received.
KEY RATING DRIVERS
The expected rating reflects the explicit and irrevocably guarantee from Hamburg
and Schleswig-Holstein. Their 'AAA' ratings are based on the strong support
mechanisms that apply to all members of the German Federation, and the extensive
liquidity facilities they benefit from, which ensure timely debt and debt
The support mechanism applies uniformly to all members of the German Federation:
the Federal Republic of Germany (AAA/Stable) represented by the federal
government (Bund) and the 16 federated states, which includes the two states
guaranteeing this issue. All Laender are equally entitled to financial support
in the event of financial distress irrespective of differences in economic and
Hamburg and Schleswig-Holstein have founded the public law institution (Anstalt
oeffentlichen Rechts; AoeR) HSH Finanzfonds AoeR for the purpose of supporting
HSH Nordbank AG (HSH; A-/F1) with capital from its owners, enabling it to fulfil
its incumbent equity requirements in 2009. HSH issued two bonds in in the
foundation year and a large part of the redemption payments is ensured by
commission revenues stemming from the guarantee. The remainder will be
refinanced by this third issue.
Based on its legal status, HSH Finanzfonds AoeR benefits from a deficiency
guarantee (Gewaehrtragerhaftung) and a maintenance obligation (Anstaltslast)
from both states. Furthermore, both states have granted an explicit and
irrevocable, unsubordinated guarantee on first demand of all its outstanding
obligations with each state guaranteeing 50%. This means that HSH Finanzfonds
AoeR's debt ranks equally with all the guarantors' other unsubordinated and
unsecured liabilities. Both guarantors are equally and severally, but not
The law creating HSH Finanzfonds AoeR, which is located in Hamburg, became
effective on 14 April 2009. Hamburg and Schleswig-Holstein are the bearers of
the AoeR and each holds 50% of its equity.
The Deutsche Bundesbank Hamburg will act as the paying agent. The liquidity of
the issue is underpinned by the safe cash management system operated by the
states (overnight cash exchanges between the states and the Bund when necessary
and recourse to appropriate short-term credit lines). The issue is zero
risk-weighted and is European Central Bank repo-eligible.
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. Any
change on the legal status of the issuer or the existing guarantee scheme will
also require a review of the bond rating.
A pre-sale report is available at www.fitchratings.com.
Link to Fitch Ratings' Report: HSH Finanzfonds AoeR