OREANDA-NEWS. This announcement corrects the version published earlier today, which incorrectly stated the issuance amount.

Fitch Ratings has assigned Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.'s (FMO; AAA/Stable) upcoming Tier 2 subordinated notes (ISIN: XS1117279379) a 'AA+' rating.

The subordinated notes amount to EUR175m, will carry a fixed interest rate and will mature in 2025. Subject to certain conditions, FMO may decide to redeem all, but not some, of the notes in December 2020 at their principal amount together with any outstanding payments, subject to regulatory approval. An application has been made for the subordinated notes to be listed and admitted to trading on Amsterdam's regulated market.

They constitute unsecured and subordinated obligations of FMO.

KEY RATING DRIVERS
The Tier 2 notes are rated one notch below FMO's 'AAA' IDR, reflecting the risk of repayment subordination to senior unsecured debt-holders in case of liquidation or bankruptcy or emergency regulation declared applicable to FMO by the supervisory authority as per provisions of the bond memorandum (or other deliberations) despite the state support extended to all FMOs' debt liabilities.

The ratings reflect Fitch's expectations of strong extraordinary support from the Netherlands (AAA/Stable/F1+) due to the 1998 agreement (the "keep-well agreement") between FMO and the government. Under Article 8 of the agreement, the state is legally bound to enable FMO to meet its financial obligations on time, notably by providing liquidity. The tenor of the agreement is indefinite and its termination requires 12 years' notice. Article 7 of the agreement provides the state's maintenance obligation in most circumstances to safeguard FMO's solvency. Article 8 provides the state shall prevent situations arising in which FMO is unable to meet its commitments in respect of loans raised on the capital market. The state's obligation is to FMO, not to third parties. The agreement does not differentiate between different levels of debt classes; therefore, Fitch considers that FMO's subordinated debt is captured under the keep-well agreement and rated according to a top-down approach.

FMO's activity and accounts are tightly controlled and monitored by the state through the Ministry of Finance and the Ministry of Foreign Affairs and Cooperation Development, and it has strategic importance for Dutch development aid policy. FMO obtained a full banking license in 2014 and is regulated as a bank.

Fitch believes that the state would act pre-emptively to replenish FMO's capital levels, in case of need, due to the dependence of FMO's business model on the state's strategic interest. If there is a need for capital support, Fitch considers it highly likely that support from the state would be arranged in accordance with the keep-well agreement.

As a development finance institution, FMO's main goal is to support sustainable private initiatives in emerging markets, in accordance with Dutch development aid policy. Its core business is to provide long-term financing (outstanding EUR3.9bn net loans at end-2014; equity investments EUR1.15bn) to private companies and financial institutions. In addition, FMO manages several strategic development funds on behalf of the Dutch government. These off-balance-sheet funds accounted for EUR978m at end-2014 (total committed portfolio).

RATING SENSITIVITIES
Changes to the subordinated notes' rating would result from changes to FMO's IDRs.

Significant changes to the keep-well agreement between the state and FMO could result in a downgrade of FMO's IDRs and hence the notes' rating.