Overview
- On Dec. 2, 2022, we revised our outlook on France to negative from stable and affirmed our unsolicited 'AA/A-1+' ratings on the sovereign.
- On Dec. 6, 2022, following the outlook revision on France, we revised the outlook to negative from stable on the European Financial Stability Facility.
- Following the above rating actions, we have affirmed our 'AA' ratings on GE SCF's covered bond program and outstanding issuances and revised the outlook to negative from stable.
MADRID (S&P Global Ratings) Dec. 15, 2022--S&P Global Ratings today revised the outlook on the covered bond ratings to negative from stable on GE SCF S.C.A's public sector covered bond program and related issuances. We also affirmed our 'AA' credit ratings on the covered bonds.
This rating action follows the outlook revisions to negative from stable on France and on the European Financial Stability Facility (EFSF) that took place on Dec. 2, 2022, and Dec. 6, respectively (see "Related Research").
Since December 2016, GE SCF's cover pool is in orderly winddown, and the outstanding covered bonds are collateralized by a static portfolio of European sovereign and supranational bonds currently rated 'AA' and above.
Because the portfolio is neither granular nor diversified, we use our weak-link approach to analyze its credit quality, using our "Principles Of Credit Ratings," criteria, published on Feb. 16, 2011. Accordingly, we view the pool's credit default risk to be commensurate with the credit quality of the lowest rated asset in the pool (weak-link approach), leading to a rating on the covered bonds of 'AA', which is the long-term rating on France, Belgium, and the European Financial Stability Facility (EFSF), all rated 'AA'. As a result, any negative rating action on the lowest-rated entity will result in a similar rating action on the covered bonds.
Therefore, following the outlook revision to negative from stable on France and the EFSF, we have revised the outlook on GE SCF's covered bond program and outstanding covered bonds to negative from stable.
There are no rating constraints related to legal, counterparty, or administrative and operational risks. Sovereign risk limits the rating on the covered bonds to that of the lowest-rated country in the portfolio.
The negative outlook on the program and the covered bonds reflects the negative outlook on our long-term ratings on France and the EFSF, the sovereign bonds of which are the lowest-rated assets in the portfolio and which have a negative outlook.
Related Criteria
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- Criteria | Structured Finance | General: Incorporating Sovereign Risk In Rating Structured Finance Securities: Methodology And Assumptions, Jan. 30, 2019
- Legal Criteria: Structured Finance: Asset Isolation And Special-Purpose Entity Methodology, March 29, 2017
- Criteria | Structured Finance | Covered Bonds: Covered Bond Ratings Framework: Methodology And Assumptions, June 30, 2015
- Criteria | Structured Finance | Covered Bonds: Covered Bonds Criteria, Dec. 9, 2014
- Criteria | Structured Finance | Covered Bonds: Methodology And Assumptions For Assessing Portfolios Of International Public Sector And Other Debt Obligations Backing Covered Bonds And Structured Finance Securities, Dec. 9, 2014
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
Related Research
- Outlooks On Seven French Government-Related Entities Revised To Negative From Stable After Similar Action On France, Dec. 6, 2022
- France Outlook Revised To Negative On Rising Budgetary Risks; 'AA/A-1+' Ratings Affirmed, Dec. 2, 2022
- Global Covered Bond Insights Q3 2022, Sept. 8, 2022
- S&P Global Ratings Definitions, Nov. 10, 2021
- GE SCF S.C.A. French Covered Bonds Ratings Affirmed Following Counterparty Action; Outlook Stable, Oct. 29, 2021
- Glossary Of Covered Bond Terms, April 27, 2018
- Assessing Credit Quality By The Weakest Link, Feb. 13, 2012
Primary Credit Analyst: | Ana Galdo, Madrid + 34 91 389 6947; ana.galdo@spglobal.com |
Secondary Contact: | Casper R Andersen, Frankfurt + 49 69 33 999 208; casper.andersen@spglobal.com |
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