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TEXT S&P revises Credit Foncier et Communal d'Alsace et de Lorraine-Banque outlook
November 13, 2012 / 6:01 PM / in 5 years

TEXT S&P revises Credit Foncier et Communal d'Alsace et de Lorraine-Banque outlook

OVERVIEW

     -- On Oct. 25, 2012, we revised our outlook to negative from stable on 
Credit Foncier et Communal d'Alsace et de Lorraine-Banque (CFCAL-Banque; 
A/Negative/A-1).
     -- Our covered bond ratings on the Obligations Foncieres issued by Credit 
Foncier et Communal d'Alsace et de Lorraine - Societe de Credit Foncier are 
one notch above our rating on the program's sponsor, CFCAL-Banque.
     -- Consequently, we have revised our outlook on the covered bonds issued 
by Credit Foncier et Communal d'Alsace et de Lorraine - Societe de Credit 
Foncier (CFCAL-SCF) to reflect the outlook on CFCAL-Banque.
  

LONDON (Standard & Poor's) Nov. 13, 2012--Standard & Poor's Ratings Services 
today revised its outlook to negative from stable on its ratings on the 
covered bond program and related series of Obligations Foncieres (OFs; French 
legislation-enabled covered bonds) issued by Credit Foncier et Communal 
d'Alsace et de Lorraine - Societe de Credit Foncier (CFCAL-SCF) (see list 
below). 

The issuer is a "societe de credit foncier" (SCF; a special-purpose financial 
institution) owned by Credit Foncier et Communal d'Alsace et de 
Lorraine-Banque (CFCAL-Banque; A/Negative/A-1).

On Oct. 25, 2012, we revised our outlook on CFCAL-Banque to negative from 
stable (see "Various Rating Actions Taken On French Banks Due To Rising 
Economic Risks," published on RatingsDirect on the Global Credit Portal).

Consequently, we have today revised our outlook on CFCAL-SCF's covered bond 
program and related series of OFs to reflect the covered bonds' exposure to 
the program's sponsor, CFCAL-Banque. We uplift the rating on the OFs from that 
on CFCAL-Banque, to which we deem CFCAL-SCF a core subsidiary. 

According to our asset-liability mismatch (ALMM) risk criteria, CFCAL-SCF's 
OFs could achieve up to seven notches of uplift above the credit rating on 
CFCAL-Banque (see "Revised Methodology And Assumptions For Assessing 
Asset-Liability Mismatch Risk," published Dec. 16, 2009). This is based on our 
assessment of the covered bonds' ALMM risk classification as "low" and our 
categorization of the program in category 1.

However, the difference between the rating on the OFs and the credit rating on 
CFCAL-Banque is limited to one notch. This is based on our assessment of 
CFCAL-SCF's and CFCAL-Banque's operational and administrative risks. These 
include a lack of segregation between the SCF and the bank's systems, cash 
flows and accounts, as well as the limited size of the bank's operations. 

Furthermore, according to our criteria "Covered Bonds Counterparty And 
Supporting Obligations Methodology And Assumptions" and "Counterparty Risk 
Framework Methodology and Assumptions," both published on May 31, 2012, the 
ratings on the program and series are also linked by way of a one-notch uplift 
to that on CFCAL-Banque due to its swap exposures. The ratings are also 
weak-linked to that on the transaction's liquidity facility provider Credit 
Mutuel Arkea (A+/Negative/A-1).

Therefore, the ratings on the OFs are effectively capped at one notch above 
that on the bank. 

As a result, today's outlook revision on the covered bonds program and OFs 
issued by CFCAL-SCF follows that on CFCAL-Banque on Oct. 25, 2012. No other 
rating action was taken. 


RELATED CRITERIA AND RESEARCH
     -- Covered Bond Ratings Framework: Methodology And Assumptions, June 26, 
2012
     -- Counterparty Risk Framework Methodology and Assumptions, May 31, 2012
     -- Covered Bonds Counterparty And Supporting Obligations Methodology And 
Assumptions, May 31, 2012
     -- Principles Of Credit Ratings, Feb. 16, 2011
     -- Revised Methodology And Assumptions For Assessing Asset-Liability 
Mismatch Risk In Covered Bonds, Dec. 16, 2009
     -- European Legal Criteria for Structured Finance Transactions, Aug. 28, 
2008

RATINGS LIST

                                   

OUTLOOK ACTION
              To             From
Credit Foncier et Communal d'Alsace et de Lorraine - Societe de Credit Foncier 
And Related Issuances 
Long-term:    A+/Negative    A+/Stable   

France: Legislation-Enabled Covered Bonds (Obligations Foncieres)

0 : 0
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