Scope Group’s Post

Scope has completed a monitoring review for the Federal Republic of Germany. The periodic review resulted in no rating action.   The Federal Republic of Germany’s long-term AAA/Stable ratings are underpinned by the following credit strengths: i) its wealthy, large, diversified economy; ii) its robust fiscal policy framework and strong track record of fiscal discipline; and iii) a highly competitive external sector. Challenges relate to: i) transition risks for energy-intensive industries given carbon neutrality targets and low levels of public and private sector investment relative to peers; ii) an ageing population, resulting in rising pension liabilities and downward pressure on the country’s medium-run growth potential; and iii) vulnerabilities related to global geopolitical risk.   For the full monitoring review, please follow this link: https://lnkd.in/eAymbng4   For the updated rating report accompanying this review, please follow this link: https://lnkd.in/ebhEgNMC Eiko Sievert Alvise Lennkh-Yunus, CFA Giacomo Barisone, PhD #sovereigns

Scope affirmed the Arab Republic of Egypt’s ratings at B- and revised the Outlook to Stable on 12 April   Renegotiation of the IMF programme and strong commitment to reform drive the Outlook change. Weak debt affordability and high government debt remain credit challenges, Scope said.   For the full rating action release, please follow this link: https://lnkd.in/edCR5_dn   For the associated rating report, please follow this link: https://lnkd.in/emPia7rM Thomas Gillet Alvise Lennkh-Yunus, CFA Giacomo Barisone, PhD #sovereigns

Scope affirmed the Council of Europe Development Bank’s AAA rating with Stable Outlook on 12 April.   A strong capital base, excellent asset quality, very high liquidity buffers, growing strategic importance, and highly rated shareholders support the rating. High leverage is the key credit challenge, Scope said.   For the full rating action release, please follow this link: https://lnkd.in/e6REhQhJ For the associated rating report, please follow this link:  https://lnkd.in/eVFDr8vR Thomas Gillet Alvise Lennkh-Yunus, CFA #sovereigns

Europe’s real estate companies grapple with negative credit outlook; German banks look resilient despite CRE risks; bond market access is a differentiator for property companies; systemic risks are still high in European housing Download Scope Group’s regular round-up of latest research on the European real estate sector, providing authoritative views across the asset class, from companies to markets, funds and structured products: https://lnkd.in/efyb4cHx Giacomo Barisone, PhD Philipp Wass Mathias Pleißner Karlo Fuchs Benoit Vasseur, CFA Nicolas Hardy Pauline Lambert Anne Grammatico, CFA, CESGA Azza Chammem, CESGA® Eugenio Piliego, CFA Shashank Thakur Benjamin Bouchet Stefano Bracchi Thomas Faeh Keith Mullin Sebastian Zank, CFA

Stressed commercial real estate valuations and European bank and investor exposure continue to be key areas of concern. But is talk of contagion risk and even financial stability risk justified? Join us for this timely webinar where analysts from Scope’s corporate, banking and covered bonds teams will outline their thoughts and answer your questions.

French banks quarterly: Heading into a more volatile business environment Stalling economic growth in France could herald a more difficult period for French banks. Lacklustre fourth-quarter bank results, which already cast a shadow over otherwise satisfactory full-year performance, look increasingly less like an anomaly.   “Sluggish business prospects from the downward revision of French economic growth are likely to cancel out the positive impact of rising interest margins,” said Nicolas Hardy, deputy head of financial institutions. “Two scenarios have emerged for French banks this year: a moderate recovery, with 2024 economic growth of 0.8% coinciding with a gradual decline in interest rates; or a prolonged contraction in business activity with little sensitivity to the expected fall in interest rates in the second half of the year.   Both scenarios are equally plausible in view of current macroeconomic and credit dynamics. That said, neither scenario will change the banks' risk profiles in the short term, so financial performance will be affected rather than structural soundness. Report: https://lnkd.in/ebDSTY6S Press Release: https://lnkd.in/eDaGPv7S Nicolas Hardy Marco Troiano, CFA Giacomo Barisone, PhD #financialinstitutions

Multiple bankruptcies in Germany’s automotive parts sector since mid-2023 are less a sign of a sector-wide crisis than the impact of a cyclical downturn and tight credit conditions on suppliers with financial and commercial weaknesses. Read the full analysis by Georges Dieng and Gennadij Kremer, Corporate Ratings Sebastian Zank, CFA #corporates

Japan’s sovereign Outlook was revised to Stable from Negative on 22 March due to higher inflation and its positive effects on debt sustainability. Very high levels of public debt, weak growth and rising ageing-related costs remain constraining factors. Read the full analysis by Dennis Shen, Sovereign and Public Sector Ratings Alvise Lennkh-Yunus, CFA Giacomo Barisone, PhD #sovereigns

Scope affirmed Lyse's A-/Stable issuer rating on April 04. The affirmation reflects Scope's unchanged view that Lyse can sustain good credit metrics amid the ongoing investment phase in its telecommunications division. Read the full rating action: https://lnkd.in/evPmY3C6 Per H. Thomas Faeh Sebastian Zank, CFA #corporates