OREANDA-NEWS. Fitch Ratings has assigned HSH Finanzfonds AoeR's EUR1.4bn floating-rate bonds, due 29 December 2017 (DE000A2AATT4) and HSH Portfoliomanagement AoeR's EUR250m floating-rate bonds, due 22 December 2017 (DE000A2AATS6), final 'AAA' Long-term ratings.

The bonds are guaranteed by two German federated States of Hamburg (AAA/Stable/F1+) and Schleswig-Holstein (AAA/Stable/F1+) on an unconditional, irrevocable and unsubordinated basis. The states own 50% each of HSH Finanzfonds AoeR and HSH Portfoliomanagement AoeR.

The assignment of the final ratings follows receipt of final documents conforming to information already received.


The final ratings reflect the unconditional, irrevocable and unsubordinated guarantee issued by Hamburg and Schleswig-Holstein to secure the two bonds. 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 as well as servicing guarantees if they are called.

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, are all members of the German Federation benefiting from the support mechanism. 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 founded HSH Finanzfonds AoeR, a public law institution (Anstalt oeffentlichen Rechts; AoeR), for the purpose of providing capital support to HSH Nordbank AG (BBB-/F3) on behalf of the two states.

HSH Portfoliomanagement AoeR, another public law institution, was founded by the two states for the purpose of the acquisition, profit-oriented realisation and liquidation of risk positions and non-strategic business units of HSH Nordbank AG, its domestic and foreign subsidiaries and their legal successors. This is aimed at stabilising the bank and supporting the stabilisation of the capital markets (pursuant to 8b, Abs.1 of the capital market stabilisation fund law (Finanzmarktstabilisierungsfondsgesetz). As a result HSH Portfoliomanagement AoeR is authorised to raise loans for the acquisition of such risk positions, and the commencement of operations and ongoing business activities for up to an amount of EUR6.2bn.

Based on their legal status, HSH Finanzfonds AoeR and HSH Portfoliomanagement AoeR benefit from a deficiency guarantee (Gewaehrtragerhaftung) and a maintenance obligation (Anstaltslast) from both states. Furthermore, both states are able to grant explicit and irrevocable, unsubordinated guarantees on first-demand to scheduled bond issues of both institutions on a contractual basis with each state guaranteeing 50%. This means that the guaranteed debt of HSH Finanzfonds AoeR and HSH Portfoliomanegement AoeR ranks equally with all the guarantors' other unsubordinated and unsecured liabilities. Both guarantors are equally and severally, but not jointly, liable. The guarantees are issued for an indefinite period and are governed by the laws of the Federal Republic of Germany.


A downgrade of the sovereign ratings would lead to a downgrade of the Laender and consequently the bonds' ratings. 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 to the legal status of the bond issuers or the existing guarantee scheme will also require a review of the bond ratings.