OREANDA-NEWS. Fitch Ratings has affirmed Propertize B.V.'s EUR3,6bn state-guaranteed MTN and ECP programme's Long-term rating at 'AAA' and Short-term rating at 'F1+'.

The affirmation reflects the unchanged state guarantee of Propertize B.V.'s MTN and ECP programme and issued notes. Based on Fitch's Public-Sector Entities - Outside the United States criteria, the ratings of the programme are credit-linked to the state of the Netherlands (AAA/Stable/F1+).

KEY RATING DRIVERS
The ratings reflect Fitch's belief that the Dutch state will meet its financial obligations arising from the guarantee it has extended to the debt securities issued under the programme. The guarantee is irrevocable and unconditional. The 'Rules of the Propertize Debt Guarantee Scheme', a publicly available document, describes the guarantee's framework and principles.

As part of the nationalisation of SNS REAAL in February 2013, the Dutch authorities decided to transfer SNS Bank's property finance exposures (the weak performance of which caused the bank's failure) to an ad-hoc state-owned company. The nationalisation and related transactions have been considered state aid and required approval by the European Commission (EC), which was given on 18 December 2013. On 30 December 2013, the shares of SNS Property Finance were transferred to the Dutch state, and the ad-hoc company was renamed Propertize B.V. with the mission to manage down its mortgages and property portfolio.

The programme allows both short-term ECP issues with a maturity of one to 364 days and MTN with a maximum maturity of 10 years. Moreover, under the programme, Propertize cannot issue debt securities with maturities beyond 31 December 2023. Therefore, all issues made under the programme will benefit from the state guarantee. As of end 2014, the total amount of the programme had reduced to EUR3.6bn, which reflects the progressive downsizing of Propertize's portfolio and refinancing needs, in accordance with its mission. The outstanding amount was EUR3.5bn at year-end 2014, and EUR2.7bn at end-September 2015.

Fitch notes that the guarantee is specifically given to Propertize B.V.'s notes and bond issues, denominated in EUR, USD, or GBP, within the refinancing scheme described above. Fitch believes that the guarantee from The Netherlands ensures a timely repayment to bondholders, within 10 business days of demand.

The Dutch government is currently considering selling the totality of its share within Propertize B.V. to private sector entities. This could be effective by 1H16. The Dutch government estimates that the conditions on the market for commercial real estate loans have improved in the Netherlands, with higher liquidity, and that interest from market players is growing. According to the Ministry of Finance, a full sale of the company would represent an attractive option compared with the continuation of the current reduction plan.

Under the form it is currently envisaged, Fitch considers the sale of Propertize B.V. will not affect the credit quality of the issuances made under the state-guaranteed ECP and MTN programme. Fitch understands that the state guarantee (until 2023) on outstanding issues will remain and no new issuance under the guaranteed programme would be possible once the company is privatised. According to the currently envisaged plan, the notes will be serviced by a specific deposit paid by the purchasers, kept in escrow by the state of the Netherlands.

RATING SENSITIVITIES
As the ratings of the programme are aligned with the Netherlands, any downgrade of the sovereign's IDRs would be mirrored by similar action on the programme's ratings.