Norway’s Eksportfinans Cut to Junk at S&P
Eksportfinans ASA (6120B), which is being wound down after breaching capital rules, was cut to junk after the Norwegian government indicated it probably won’t provide further support to the unit, Standard and Poor’s said.
The Oslo-based lender was cut to BB+, the highest non- investment rating, from BBB+ and was placed on negative outlook, S&P said. It was removed from credit watch.
“After discussions with the Norwegian authorities, we are of the view that there is little current government willingness to provide additional extraordinary government support,” S&P said. “We now view Eksportfinans as having a limited public policy role with a limited link to the Norwegian government.”
Norway shocked credit markets around the globe with its Nov. 18 decision to wind down partly state-owned Eksportfinans. Moody’s Investors Service on Nov. 22 cut the unit’s debt to junk while Standard & Poor’s days later cut its rating five levels to BBB+. The downgrades sent tremors through bond markets as far as Japan, where investors hold more than 1 trillion yen ($12.7 billion) of Eksportfinans debt, including its Samurai and Uridashi notes, according to SMBC Nikko Securities Inc.
The government said it decided to dismantle Eksportfinans, created in 1962 to aid exporters, after rejecting the lender’s pleas to sidestep European capital rules limiting loans to single industries. Under the new regulations, the company would have had to increase capital levels fivefold, according to Standard & Poor’s.
S&P in November said the government’s decision to wind down the unit meant its euro medium-term note program may already be in default. The rating company didn’t provide any update on that in today’s statement.
Eksportfinans is 15 percent owned by the Norwegian government. DNB ASA holds 40 percent, while 23.21 percent is held by Nordea Bank AB, the largest Nordic lender. Danske Bank A/S in Copenhagen owns 8.09 percent.
To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net
To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net
Rate this Page