Strong integration with its owning counties, high strategic importance in regional development, a strong market position, and resilient toll revenue are strengths. High leverage and substantial capital expenditure are challenges.

The rating on Hypo-Bank Burgenland AG’s Austrian mortgage covered bonds (Hypothekenpfandbriefe) reflects the issuer's A- rating enhanced by six notches from governance and cover pool support. Two notches provide a buffer against an issuer downgrade.

This publication does not constitute a rating action.

The issuer rating reflects the stable cash flow from a diversified Budapest office portfolio, strong profitability and relatively low leverage. The issuer’s small size, weak tenant and geographic diversification, and modest market share are constraints.

The periodic review has resulted in no rating action.

The periodic review has resulted in no rating action.

Weakening public finances and a fragmented political environment challenging fiscal consolidation prospects drive the downgrade. A wealthy economy, favourable debt profile, and sound external position anchor the ratings.

The downgrade is driven by Scope’s assessment of AEI’s continued refinancing efforts relating to its bond maturing in December 2025. Should these efforts prove unsuccessful, there is a significant risk that AEI could enter into default.

The downgrade reflects recurring loan covenant breaches due to increasing margin volatility that has weakened credit metrics. The Outlook captures the continued uncertainty on a recovery and the unresolved waivers.

The rating is supported by the issuer’s hydropower reservoir utilization and strong credit metrics. Exposure to power price volatility and limited diversification constrains the rating.