DBRS Morningstar Assigns AA (high) Rating to the City of Lyon’s EMTN Programme and R-1 (high) Rating to its NEU CP Programme

DBRS Ratings GmbH (DBRS Morningstar) assigned an AA (high) Rating to the EUR 500 million Euro Medium Term Note Programme (EMTN Programme) of the City of Lyon as well as an R-1 (high) Rating to its EUR 150 million Negotiable European Commercial Paper Programme (NEU CP Programme). The rating on the EMTN Programme is in line with the Long-Term Issuer Rating of the City of Lyon and the rating on the NEU CP Programme is in line with the Short-Term Issuer Rating of the City.

The securities issued under these Programmes constitute direct, unsecured and unsubordinated obligations and rank pari passu with the Issuer’s other current and future direct, unsecured, and unsubordinated liabilities, except those which may be mandatorily preferred by law. The NEU Programme is for the issuance of short-term negotiable debt securities with maturities not exceeding 365 days (366 days in a leap year), from the issue date. DBRS Morningstar expects the City of Lyon to have at any time sufficient liquidity available (cash and/or liquidity lines) to cover its CP program outstanding amounts.

RATING DRIVERS
The rating for the EMTN Program is expected to move in tandem with the Long-Term Issuer Rating of the City of Lyon and the rating on the NEU CP Programme is expected to move in tandem with the Short-Term Issuer Rating of the City. Therefore, an upgrade of Lyon’s Long-Term Issuer Rating would lead to an upgrade of the EMTN Programme. Conversely, a downgrade of Lyon’s Long-Term Issuer Rating would result in a downgrade of the EMTN Programme and a downgrade of Lyon’s Short-Term Issuer Rating would trigger a downgrade of its NEU CP Program.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS

There were no Environmental, Social, and Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (17 May 2022).

RATING COMMITTEE SUMMARY

The main points discussed during the Rating Committee include the characteristics of the City of Lyon’s EMTN and NEU CP Programmes, the liquidity profile of the City and its available liquidity backup facilities.

Notes:
All figures are in euro (EUR) unless otherwise noted.

The principal methodologies are Rating European Sub-Sovereign Governments https://www.dbrsmorningstar.com/research/401273/rating-european-sub-sovereign-governments (August 12, 2022) and the DBRS Morningstar Criteria: Commercial Paper Liquidity Support for Nonbank Issuers https://www.dbrsmorningstar.com/research/393065/dbrs-morningstar-criteria-commercial-paper-liquidity-support-for-nonbank-issuers (March 1, 2022). In addition DBRS Morningstar uses the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings, https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022) in its consideration of ESG factors.

DBRS Morningstar materially deviated from the DBRS Morningstar Criteria: Commercial Paper Liquidity Support for Nonbank Issuers (March 1, 2022) when determining the rating assigned to the City of Lyon’s Negotiable European Commercial Paper Programme by applying the same analytical approach in the Criteria applicable to Canadian Municipal Governments to the City of Lyon. The material deviation is warranted given that the City of Lyon benefits from stable and predictable cash flows and a comfortable level of liquidity.

The sources of information used for this rating include the City of Lyon for its Euro Medium Term Note Programme Prospectus, its Negotiable European Commercial Paper Information Memorandum and its liquidity situation. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

This rating concerns newly issued financial instruments. These are the first DBRS Morningstar ratings on those financial instruments.

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.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-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: https://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. DBRS Morningstar understands further information on DBRS Morningstar historical default rates may be published by the Financial Conduct Authority (FCA) on its webpage: https://www.fca.org.uk/firms/credit-rating-agencies.

The sensitivity analysis of the relevant key rating assumptions can be found at: https://www.dbrsmorningstar.com/research/404940.

This rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Mehdi Fadli, Vice President, Global Sovereign Ratings
Rating Committee Chair: Nichola James, Managing Director, Co-Head Global Sovereign Ratings
Initial Rating Date: October 7, 2022
Last Rating Date: October 7, 2022

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