Fitch Affirms NRAM and B&B Senior Debt at 'AA+'
KEY RATING DRIVERS
NRAM's and B&B's senior unsecured debt ratings reflect Fitch's view that the default risk on these securities is materially the same as that of the UK sovereign (AA+/Stable). This is because NRAM's and B&B's private sector unsecured senior and unsubordinated debt as well as any accumulated interest on them are guaranteed by the UK government under a public law guarantee, granted when the institutions were nationalised.
The guarantee extends until the maturity of the guaranteed debt. Fitch believes that even though there is no specific reference to the guarantee being unconditional and irrecoverable, it would be extremely unlikely that the UK would assume any reputational or economic risk by failing to provide support if needed.
NRAM's and B&B's senior unsecured debt ratings are sensitive to a change in the UK's sovereign rating or to a change in the conditions of the guarantee granted by the UK government to NRAM and B&B.
Fitch believes that timely payment under the guarantee is highly likely as non-payment of the guarantor would seriously tarnish the UK's reputation in this important area of public policy. Even if government policies in this area were to change, we believe the government would still honour the guarantee given the reputational implications of failing to do so.
The rating actions are as follows:
XS0101368818 GBP200m maturing December 2019 affirmed at 'AA+'
XS0281590488 EUR30m maturing February 2047 affirmed at 'AA+'