DBRS Morningstar Confirms ICO’s Long-Term Ratings at A, Positive Trend

DBRS Ratings GmbH (DBRS Morningstar) confirmed Instituto de Crédito Oficial’s (ICO or the Bank) ratings, including the Long-Term Issuer Rating at A and the Short-Term Issuer Rating at R-1 (low). All ratings have Positive Trend. ICO’s Support Assessment remains SA1. See a full list of ratings at the end of this press release.

KEY RATING CONSIDERATIONS

The confirmation of ICO’s Long-Term Issuer Rating at “A”, Positive trend follows DBRS Morningstar’s confirmation of the Kingdom of Spain’s Long-Term Foreign and Local Currency rating at “A” with a Positive trend on March 6, 2020. ICO’s ratings reflect its statutory ownership and the full guarantee of its liabilities by the Kingdom of Spain as stated in its by-laws under the Royal Decree Act 706/1999. As a result, DBRS Morningstar’s support assessment for ICO is SA1 and ICO’s issuer ratings and trend are equalised with the Long-Term and Short-Term Foreign and Local Currency ratings of the Kingdom of Spain and will move in line with the rating of the Spanish sovereign.

RATING DRIVERS

The Long-Term and the Short-Term ratings move in line with the ratings of the Kingdom of Spain. A positive rating action on the Kingdom of Spain would be reflected in ICO´s ratings. Similarly, a negative rating action on the Kingdom of Spain would be reflected in ICO´s ratings.

RATING RATIONALE

ICO is a credit institution by law and is considered to be a State Finance Agency of Spain. It benefits from an explicit, irrevocable, unconditional and direct guarantee of its liabilities from the Kingdom of Spain that is stated in its by-laws under the Royal Decree Act 706/1999. As a public specialized lending institution and the state’s financial agency, ICO enjoys a unique and dominant franchise in Spain which contributes to support its current rating. Moreover, the ratings also consider ICO’s limited business scope, constrained by its business model and its high dependence on the Spanish Government.

Notes:
All figures are in Euro unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (June 2019) and DBRS Morningstar Criteria: Guarantees and Other Forms of Support (January 2020). These can be found at: http://www.dbrsmorningstar.com/about/methodologies

The sources of information used for this rating include Company Documents, and S&P Global Market Intelligence. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS Morningstar does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

Generally, the conditions that lead to the assignment of a Negative or Positive Trend are resolved within a twelve month period. DBRS Morningstar's outlooks and ratings are under regular surveillance.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (“ESMA”) in a central repository, see:
http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml

Ratings assigned by DBRS Ratings GmbH are subject to EU and US regulations only.

Lead Analyst: Pablo Manzano, Vice President – Global FIG
Rating Committee Chair: Ross Abercromby, Managing Director - Global FIG
Initial Rating Date: February 25, 2013
Last Rating Date: September 25, 2019

For more information on this credit or on this industry, visit www.dbrsmorningstar.com