OREANDA-NEWS. S&P Global Ratings affirmed its issuer credit ratings on the Bank of North Dakota (BND) at 'A+/A-1'. The rating outlook remains stable.

We also affirmed the deposit rating at 'AA' and the short-term deposit rating at 'A-1+', and we maintained our stand-alone credit profile (SACP) at 'a'.

The affirmation of the ratings on BND follows the recent affirmation of the ratings on the state of North Dakota at 'AA+' (see "North Dakota; Appropriations; General Obligation; Moral Obligation," published Aug. 31, 2016, on RatingsDirect.) As a state-run financial institution, the bank participates in activities that broadly promote commerce, agriculture, and industry in North Dakota. Our ratings on the bank reflect our assessment of the likelihood of extraordinary support from the state to the bank, which we view as high based on our assessment of a very strong link and important role.

"The stable rating outlook reflects our view that the link between the bank and the current ratings on the state of North Dakota support the issuer credit and deposit ratings on BND," said credit analyst Raphaele Hunter. "Given these links, a two-notch reduction in the SACP would leave the issuer credit ratings or the deposit ratings unchanged."

We could lower the SACP in the coming two years if the state's economy weakens further than we anticipated, if capital appropriations by the state increase by more than we currently expect--enough to impair BND's capital profile such that the risk-adjusted capital ratio remains below the 15% threshold on a consistent basis--or if the bank's asset quality deteriorates significantly. We are unlikely to raise the SACP in the near term given the cyclicality of the state's revenue base and the interdependence between the state and BND.

We could lower the ratings on the bank's deposits if we lowered the rating on the state by one notch to 'AA', and we could lower the issuer credit ratings should we downgrade the state by more than two notches.