Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.

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 ratings’ 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 rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the European Financial Stability Facility (long-term foreign-currency issuer and senior unsecured debt ratings: AA+/Stable; short-term foreign-currency issuer ratings: S-1+/Stable) on 8 April 2024.

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 rating history can be found on www.scoperatings.com.

Key rating factors

Scope’s AA+ rating of the EFSF reflects the supranational’s highly rated key shareholders, strong guarantee mechanism and excellent capital market access. By early February, the EFSF completed 55% of its EUR 20bn long-term funding programme for 2024. However, the EFSF’s mandate to lend to crisis-hit countries and its lack of preferred creditor status result in a moderate asset quality, and its shareholder base is highly concentrated. Repayments on outstanding loans by the EFSF’s three borrowers stretch over a long period with Portugal (A-/Stable) expected to make its final repayment in 2040, Ireland (AA-/Positive) in 2042 and Greece (BBB-/Stable) in 2070.

The Stable Outlook reflects our view that risks are balanced over the next 12 to 18 months. The ratings/Outlooks could be downgraded if, individually or collectively: i) key shareholders were downgraded; and/or ii) the cash buffer decreased significantly. The ratings/Outlooks could be upgraded if, individually or collectively: i) key shareholders were upgraded; and/or ii) the EFSF’s liquidity buffers increased significantly and permanently.

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

The methodology applicable for the reviewed ratings and rating Outlooks (Supranational Rating Methodology, 3 August 2023) is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Eiko Sievert, Director

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