Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or at minimum each six months in the cases of sovereign, sub-sovereign and supranational organisation issuers.

Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key ratings assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review of the Republic of Austria (AAA/Stable; S-1+/Stable) on 22 February 2022.

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

Key rating factors

For the updated Rating Report accompanying this review, click here.

Austria’s AAA rating reflect the country’s: i) wealthy, resilient and diversified economy, with Scope’s expectation of robust growth prospects in the recovery phase of the Covid-19 crisis; ii) strong external position with low private-sector indebtedness; iii) a sound banking sector; and iv) favourable public debt profile with low financing costs and long average maturity, mitigating risks from an elevated public debt stock and aiding medium-term fiscal consolidation. The rating is constrained by: i) a high public debt stock relative to peer levels; and ii) long-term spending pressures arising from high pension and healthcare costs and an ageing society that also weighs on growth prospects in the absence of structural reforms.

The Stable Outlook reflects Scope’s view that the risks Austria faces over the next 12 to 18 months are well balanced.

The ratings/Outlooks could be downgraded if, individually or collectively: i) growth prospects weaken substantially, for example, due to an erosion of international competitiveness; ii) the fiscal outlook deteriorates, leading to the general government debt-to-GDP ratio deviating persistently and materially from a medium-term downward trend; and/or iii) risks in the banking sector re-emerge, increasing financial stability concerns and possibly raising the need for government intervention.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Ratings, 8 October 2021) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Julian Zimmermann, Analyst.

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