Fitch Affirms FROB's Bonds at 'BBB+'
OREANDA-NEWS. Fitch Ratings has affirmed the Spanish Executive Resolution Authority's (FROB) bonds at Long-term local currency 'BBB+'.
FROB has two outstanding bonds of EUR520m maturing in April 2017 and EUR2,505m maturing in July 2016.
KEY RATING DRIVERS
The 'BBB+' ratings reflect the explicit, irrevocable and unconditional guarantee provided by the Kingdom of Spain (BBB+/Stable). The guarantee falls under the EUR27bn guarantee programme referenced in the Ministerial Order (EUR12.5bn available after these bond issues). The bonds are also supported by the General Secretary of the Treasury and Financial Policy's acknowledgment that they are covered under the state's guarantee programme, as required under the Ministerial Order.
The FROB was created in 2009 and is now regulated by Law 11/2015 of 18 June 2015 on the recovery and resolution of credit institutions and investment companies.The approval of Law 11/2015, which transposes the Bank Recovery and Resolution Directive (BRRD) into Spanish legislation, has resulted in changes to the resolution institutional framework, making FROB part of the European Single Resolution Mechanism and affecting the way in which future resolutions will be funded. Potential recapitalisations will be covered internally through the bail-in initially or, eventually, through resources contributed by the financial sector to the Resolution Fund. The Law defines FROB as the national executive resolution authority. As such, FROB is entitled to cover its operational expenses through a levy on the contributions by credit institutions and investment companies to the Resolution Fund, which will be collected by FROB.
Changes in the ratings of the guarantor will automatically be reflected in the ratings of the bonds.