Morningstar DBRS Confirms Rating on Hannover Funding Company LLC's 4(2) Commercial Paper

DBRS, Inc. (Morningstar DBRS) confirmed its credit rating on the 4(2) Commercial Paper issued by Hannover Funding Company LLC.

The credit rating action is based on the following analytical considerations.

-- Morningstar DBRS Financial Institutions Group's rating on Norddeutsche Landesbank Girozentrale (NORD/LB) of R-1 (middle) with a Stable trend.

-- NORD/LB provides full support for each transaction within the conduit.

-- The legal construct of the asset-backed commercial paper conduit.

-- The Transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary, " Baseline Macroeconomic Scenarios for Rated Sovereigns September 2024 Update," published on September 25, 2024. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse coronavirus pandemic scenarios, which were first published in April 2020.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
Governance (G) Factors
The transaction is dependent on the creditworthiness of Norddeutsche Landesbank Girozentrale (NORD/LB) who provides full credit and liquidity support to the commercial paper conduit. NORD/LB is German public-sector Bank and member of the Sparkassen Finanzgruppe (SFG), and any credit rating actions on SFG are likely to have an impact on the credit rating of NORD/LB, and in turn the transaction.

The subfactor Corporate Governance is relevant to the rating of SFG, as well as NORD/LB. Morningstar DBRS views certain weaknesses in the SFG group structure as relevant from a corporate government perspective. Notably, the Landesbanken are majority or part-owned by German Federal States. State governments, in our view, have limited capabilities to effectively supervise the banks' activities. In the past, NORD/LB has taken outsized risks, resulting in high costs to tax payers and the Sparkassen. Sparkassen associations, while part-owners of some Landesbanken, have had only limited influence over the risk taking by the Landesbanken.

This G factor is new and was not present in the prior credit rating disclosure. For added transparency it was evaluated and included with respect to this credit rating action.

Credit rating actions on Norddeutsche Landesbank Girozentrale are likely to have an impact on this credit rating. ESG factors that have a significant or relevant effect on the credit analysis of Norddeutsche Landesbank Girozentrale are discussed separately at https://dbrs.morningstar.com/issuers/20828.

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

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

Notes:
The principal methodology applicable to the credit rating is Rating and Monitoring Asset-Backed Commercial Paper: U.S. ABCP Conduits https://dbrs.morningstar.com/research/426900 (January 22, 2024)

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed credit ratings:

The last credit rating action on this issuer took place on October 17, 2023, when Morningstar DBRS confirmed its rating on Hannover Funding Company LLC's 4(2) Commercial Paper at R-1 (middle) (sf).

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

Lead Analyst: Peyton Rieser, Assistant Vice President
Rating Committee Chair: Du Trieu, Senior Vice President, Sector Lead
Initial Rating Date: November 11, 2016

DBRS, Inc.
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The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- Operational Risk Assessment for U.S. ABS Originators and Servicers (August 6, 2024),
https://dbrs.morningstar.com/research/437545

-- Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024),
https://dbrs.morningstar.com/research/428623

-- Legal Criteria for U.S. Structured Finance (April 15, 2024),
https://dbrs.morningstar.com/research/431205

-- Rating U.S. Structured Finance Transactions (August 6, 2024),
https://dbrs.morningstar.com/research/437571

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.