OREANDA-NEWS. Fitch Ratings has assigned Laender 50's EUR1.5bn 0.125% fixed-rate bonds (DE000A2AASV2), due 14 April 2023, a final 'AAA' Long-term rating. The bonds are issued by a group of six German federated states (Laender). This is the 50th joint issue of the German Laender and the 38th to be rated by Fitch.

KEY RATING DRIVERS
The final rating reflects the strong support mechanisms that apply to all members of the German Federation, including the six German federated states involved in the joint issue, and the extensive liquidity facilities they benefit from, which ensure timely debt and debt service payment.

The support mechanism apply uniformly to all members of the German Federation: the Federal Republic of Germany (AAA/Stable) represented by the federal government (Bund) and the 16 federated states, which include the six states undertaking the issue: Bremen, Hamburg, Mecklenburg-Vorpommern, Rheinland-Pfalz, Saarland and Schleswig-Holstein. All Laender are equally entitled to financial support in the event of financial distress irrespective of differences in economic and financial performances.

Each state is liable for its individual share in the issue, the proceeds of which are divided between the participating states as follows:

State of Bremen: EUR262.5m
State of Hamburg: EUR262.5m
State of Mecklenburg-Vorpommern: EUR187.5m
State of Rheinland-Pfalz: EUR262.5m
State of Saarland: EUR262.5m
State of Schleswig-Holstein: EUR262.5m

The State of Hamburg is the paying agent. The issue's liquidity is underpinned by the safe cash management system the Laender operate in, which allows overnight cash exchanges between Laender and the Bund when necessary, and recourse to appropriate short-term credit lines. The issue is zero risk-weighted and European Central Bank repo-eligible.

The objective of the Laender's jumbo joint issue is to offer investors a sizeable and liquid bond with portfolio exposure to several issuers.

RATING SENSITIVITIES
Negative rating action would be triggered by a change in Germany's sovereign ratings. Any change in the support scheme would result in a review of the rating.