MADRID (Standard & Poor's) Jan. 30, 2009--Standard & Poor's Ratings Services
said today that it has affirmed its 'AAA' long-term issuer credit rating on
the Spanish Autonomous Community of the Basque Country. At the same time, the
rating was removed from CreditWatch, where it had been placed with negative
implications on Jan. 12, 2009, as a result of a similar action on the Kingdom
of Spain (AA+/Stable/A-1+). The outlook is stable.
"The affirmation reflects the Basque Country's special fiscal status,
which allows the region to levy and collect taxes locally," said Standard &
Poor's credit analyst Myriam Fernández de Heredia. "This fiscal autonomy and
power--which is shared only by the Autonomous Community of Navarre--is unique
among European regional and local governments."
The affirmation also reflects the strength of the Basque Country's
economy, which is structurally different from Spain's, and the region's robust
budgetary performance and low debt burden.
"Despite the Basque Country's strong fiscal status and different economic
structure, its economy is still correlated with that of Spain," said Ms.
Fernández de Heredia. "We therefore believe that there are still close links
between the ratings on the two governments."
The rating on the Basque Country continues to reflect the region's very
strong economic and financial fundamentals, with net financial liabilities
representing just 11% of total revenues at year-end 2008.
"According to our 2009-2011 base line scenario, which stresses revenues
and expenditures to reflect the economic downturn, the Basque Country's
indicators are still likely to be comfortably in line with the 'AAA' medians
at the end of the forecast period," said Ms. Fernández de Heredia.
We believe the Basque Country will be able to stabilize its operating
surpluses in 2009 and 2010 at about 6%-8% of operating revenues. We also
believe the region will incur manageable overall deficits (up to 6%-7% of
total revenues), entailing a controlled increase in the ratio of net financial
liabilities to total revenues to a still very low 15%-20% of 2010 expected
total revenues (according to our estimates)--still below the 'AAA' median.
The rating could come under pressure if the region is unable to
structurally stabilize its operating performance and/or materially expands its
current capital program, as this would involve a weakening of the main debt
indicators well beyond our current expectations. We consider this scenario
unlikely in the next two years.
said today that it has affirmed its 'AAA' long-term issuer credit rating on
the Spanish Autonomous Community of the Basque Country. At the same time, the
rating was removed from CreditWatch, where it had been placed with negative
implications on Jan. 12, 2009, as a result of a similar action on the Kingdom
of Spain (AA+/Stable/A-1+). The outlook is stable.
"The affirmation reflects the Basque Country's special fiscal status,
which allows the region to levy and collect taxes locally," said Standard &
Poor's credit analyst Myriam Fernández de Heredia. "This fiscal autonomy and
power--which is shared only by the Autonomous Community of Navarre--is unique
among European regional and local governments."
The affirmation also reflects the strength of the Basque Country's
economy, which is structurally different from Spain's, and the region's robust
budgetary performance and low debt burden.
"Despite the Basque Country's strong fiscal status and different economic
structure, its economy is still correlated with that of Spain," said Ms.
Fernández de Heredia. "We therefore believe that there are still close links
between the ratings on the two governments."
The rating on the Basque Country continues to reflect the region's very
strong economic and financial fundamentals, with net financial liabilities
representing just 11% of total revenues at year-end 2008.
"According to our 2009-2011 base line scenario, which stresses revenues
and expenditures to reflect the economic downturn, the Basque Country's
indicators are still likely to be comfortably in line with the 'AAA' medians
at the end of the forecast period," said Ms. Fernández de Heredia.
We believe the Basque Country will be able to stabilize its operating
surpluses in 2009 and 2010 at about 6%-8% of operating revenues. We also
believe the region will incur manageable overall deficits (up to 6%-7% of
total revenues), entailing a controlled increase in the ratio of net financial
liabilities to total revenues to a still very low 15%-20% of 2010 expected
total revenues (according to our estimates)--still below the 'AAA' median.
The rating could come under pressure if the region is unable to
structurally stabilize its operating performance and/or materially expands its
current capital program, as this would involve a weakening of the main debt
indicators well beyond our current expectations. We consider this scenario
unlikely in the next two years.
