OREANDA-NEWS. S&P Global Ratings today said it has affirmed its 'A+/A-1' long - and short-term issuer credit ratings on the state-owned Export-Import Bank of the Slovak Republic (Eximbanka). The outlookis stable.

We equalize our ratings on Eximbanka with those of on its sole owner, the Slovak Republic. This is because we regard Eximbanka as a government-related entity (GRE) and consider that there is an almost certain likelihood of government support for the entity. In our view, the government has the capability and willingness to provide timely and sufficient extraordinary support to Eximbanka in the case of a financial stress scenario in which the agency's debt-servicing capacity would be potentially jeopardized.

In accordance with our criteria for rating GREs, our rating approach for Eximbanka is based on our view of the agency's:

Critical role as a key tool supporting the government's export strategies and projects. Given Slovakia's openness and trade dependence, exports are crucial to its economic development; and

Integral link with the Slovak government. Eximbanka is 100% state owned and embedded in a comprehensive framework of supervision by the sovereign. In addition, the state has issued a guarantee for the majority of the agency's commitments.

Eximbanka was established in 1997 under Act No. 80/1997 Coll. as the Export-Import Bank of the Slovak Republic. The agency provides support to exporters through both export-related banking (direct credit, refinancing, investment loans, and guarantees) and (re-)insurance activities. In addition to its export-related operations, Eximbanka also issues guarantees and creditsfor importers with the overall aim of supporting the government's strategy of promoting trade and employment.

Under the abovementioned legislation, the state has issued a statutory guarantee (article 26 of Act No.80/1997) that makes the government unconditionally and irrevocably liable for all of Eximbanka's commitments except for marketable risk insurance. The agency's total exposure to the latter activities has almost halved over the past four years. Eximbanka's aggregate insurance exposure amounts to €550 million, which represents more than a 30% drop compared with 2012, when the exposure represented about €800 million. During the same timeframe, nonmarketable risk insurance exposure remained roughly constant and stood at €355 million for 2015, while marketablerisks contracted to €195 million in 2015 from €425 million in 2012. Net premiums earned from insurance activities represented about 40% of Eximbanka'snet revenues. The agency's banking activity exposure has grown by about 20% since 2012, standing at €372 million in 2015, on both loans and guarantees increasing.

The state guarantee does not specifically mention Eximbanka's debt obligations, nor does it address timeliness of public support. Nevertheless, we equalize our ratings on Eximbanka with those on the sovereign because we believe that the Slovak government would provide extraordinary support to Eximbanka if needed.

The Slovak government wholly owns Eximbanka through the ministry of finance. Accordingly, the ministry directly and indirectly supervises the entity. Most importantly, the ministry directly approves Eximbanka's financial statements and annual reports. The ministry can appoint and recall the supervisory board of Eximbanka, which is in charge of monitoring and auditing the agency's financial operations. Specifically, the supervisory board must approve Eximbanka's domestic and foreign capital raising, and its credit terms and conditions. In addition to the ministry, the board also must approve the agency's annual report and budget. Our assessment of the agency's link to the government also factors in the latter's track record of injecting funds into Eximbanka: €60 million in 2012, €41 million in 2009, and €17 million in 2000. The government provided these additional funds to ensure that Eximbanka's capitalization was sufficient to support its operations.

We consider the agency's public mandate as critical for the government. Eximbanka is the official export-financing agency of the Slovak Republic. As asmall and open economy, the promotion of exports and trade is a key element inmanaging the country's economic development, both for economic growth and employment. In banking, Eximbanka focuses on providing direct loans or refinancing of existing loans and issuing guarantees to clients to promote exporters or export-related activities. For importers, Eximbanka mainly grantsinvestment credits aimed at providing funds for the modernization of technology and infrastructure for trade-related business operations. Additionally, the agency complements the commercial export insurance market byprimarily focusing on insuring nonmarketable risks.

Eximbanka's total business volume decreased in 2015, amid the low-interest-rate environment and an increasingly strong commercial sector. The only business segment showing positive growth in the past year was nonmarketable export insurance risk. We view this development as evidence of Eximbanka's critical role for the Slovak export sector's business operations, for which the market does not provide financing and insurance solutions and where Eximbanka has a part to play.

The stable outlook on Eximbanka mirrors that on the Slovak Republic. Given thesovereign's high dependence on exports, we expect Eximbanka will continue to play a critical role in promoting the government's economic policies and maintain its integral link with the sovereign.

Any change in our assessment of Eximbanka's role for or link with the government would lead us to consider lowering the ratings on Eximbanka to levels below those on the sovereign.

In addition, any change in the ratings on Slovakia would trigger the same rating action on Eximbanka.