(Repeat for additional subscribers)
June 18 (The following statement was released by the rating agency)
Fitch Ratings has assigned Mecklenburg
Western-Pomerania's (Mecklenburg) EUR500m 1.625% fixed-rate bonds
(DE000A12TWL1), due 18 June 2024, a final Long-term rating of 'AAA'. This is
Fitch's first issue rating on the region. The senior unsecured bond ranks pari
passu with all Mecklenburg's other outstanding debt.
KEY RATING DRIVERS
The rating reflects the strong support mechanism that applies to all members of
the German Federation, including Mecklenburg undertaking this issue, and the
extensive liquidity facilities they benefit from, which ensure timely debt and
debt service payment.
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 include Mecklenburg. 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
Mecklenburg is located in north-east Germany and had a population of about 1.62
million at end-2013. Its capital is the City of Schwerin. Its GDP of EUR37bn
accounted for almost 1.4% of national GDP in 2013. Its GDP per capita of
EUR22,817 is about 32% below Germany's average. Since 2006 the state has not
accumulated new debt and has the fourth lowest level of indebtedness per capita
within the national context. The unemployment rate was 10.9% in May 2014, above
that of Germany (6.8%) and slightly above that of eastern Germany (9.7%).
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.