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RPT-Fitch Assigns HSH Finanzfonds AoeR's EUR500m Bond 'AAA(EXP)' Expected Rating
June 3, 2014 / 8:43 AM / 4 years ago

RPT-Fitch Assigns HSH Finanzfonds AoeR's EUR500m Bond 'AAA(EXP)' Expected Rating

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June 3 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned HSH Finanzfonds AoeR’s EUR500m floating rate bonds, due 17 June 2019, an expected Long-term rating of ‘AAA(EXP)'. The two German federated States of Hamburg (AAA/Stable/F1+) and Schleswig-Holstein (AAA/Stable/F1+) have explicitly and irrevocably guaranteed the issue.

The final rating is contingent upon the receipt of final documents conforming to information already received.


The expected rating reflects the explicit and irrevocably guarantee from Hamburg and Schleswig-Holstein. Their ‘AAA’ ratings are based on the strong support mechanisms that apply to all members of the German Federation, 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 includes the two states guaranteeing this issue. All Laender are equally entitled to financial support in the event of financial distress irrespective of differences in economic and financial performances.

Hamburg and Schleswig-Holstein have founded the public law institution (Anstalt oeffentlichen Rechts; AoeR) HSH Finanzfonds AoeR for the purpose of supporting HSH Nordbank AG (HSH; A-/F1) with capital from its owners, enabling it to fulfil its incumbent equity requirements in 2009. HSH issued two bonds in in the foundation year and a large part of the redemption payments is ensured by commission revenues stemming from the guarantee. The remainder will be refinanced by this third issue.

Based on its legal status, HSH Finanzfonds AoeR benefits from a deficiency guarantee (Gewaehrtragerhaftung) and a maintenance obligation (Anstaltslast) from both states. Furthermore, both states have granted an explicit and irrevocable, unsubordinated guarantee on first demand of all its outstanding obligations with each state guaranteeing 50%. This means that HSH Finanzfonds AoeR’s debt ranks equally with all the guarantors’ other unsubordinated and unsecured liabilities. Both guarantors are equally and severally, but not jointly, liable.

The law creating HSH Finanzfonds AoeR, which is located in Hamburg, became effective on 14 April 2009. Hamburg and Schleswig-Holstein are the bearers of the AoeR and each holds 50% of its equity.

The Deutsche Bundesbank Hamburg will act as the paying agent. The liquidity of the issue is underpinned by the safe cash management system operated by the states (overnight cash exchanges between the states and the Bund when necessary and recourse to appropriate short-term credit lines). The issue is zero risk-weighted and is European Central Bank repo-eligible.


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. Any change on the legal status of the issuer or the existing guarantee scheme will also require a review of the bond rating.

A pre-sale report is available at

Link to Fitch Ratings’ Report: HSH Finanzfonds AoeR


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