Credit rating Aaa/AAA

The Council of Europe Development Bank (CEB) enjoys triple A rating by Moody’s, Standard & Poor’s, Fitch Ratings, and Scope Ratings*. Such high rating reflects the Bank’s solid financial profile, strong support and confidence of its shareholders and stringent risk-management policy.

On 19 May 2023, Scope Ratings affirmed its rating* for the CEB at AAA with a stable outlook. On 27 June 2023, Standard & Poor’s confirmed its AAA rating with a stable outlook. On 18 July 2023, Fitch upgraded the CEB’s long-term Issuer Default Rating (IDR) to AAA ‘stable outlook’. On 2 November 2023, Moody’s confirmed the CEB’s long-term rating to Aaa ‘stable’, its highest rating. The rating of CEB’s short-term debt assigned by the rating agencies reaches the highest grade of the rating scale at ‘P-1/A-1+/ F1+/S-1+*’.

Moody’s: Aaa, stable outlook

“The credit profile of the Council of Europe Development Bank (CEB) reflects its strong asset quality and pristine track record of asset performance, as well as its high liquidity levels and strong access to funding. CEB's main credit challenges are its high leverage ratio and the fact that it only has moderate levels of callable capital relative to peers, although these metrics are set to improve due to a very significant increase of the bank's paid-in and callable capital which we expect will become effective at the beginning of 2024.”

“The stable outlook reflects our expectations that CEB’s capital adequacy will balance an excellent asset performance and a declining leverage ratio against somewhat increasing risks to its asset portfolio in coming years, while the bank’s very strong liquidity and funding profile will remain largely unchanged. Meanwhile, we expect that the level of shareholder support will remain strong in the wake of capital increase agreed at the end of 2022, with member states continuing to subscribe to the capital increase over the course of 2023 in line with their national ratification processes.”

“We [Moody’s] score CEB’s capital adequacy at “a2” based on the combination of a relatively high leverage ratio set against strong asset credit quality and exceptionally strong asset performance. That said, we make a positive one-notch adjustment for the trend on leverage, in light of the decline in leverage which we expect will follow from the increase in paid-in capital approved by the CEB Governing Board in December 2022.”

“We [Moody’s] consider CEB’s liquidity and funding position to be very strong with a score of “aa2” for its availability of liquid resources and a score of “aa” for the quality of its funding, which results in an overall score for liquidity and funding of “aa2”.

“We [Moody’s] assess CEB’s non-contractual support as “Very High” given the track record of support the bank has received from shareholders but also peers and the EU since its creation.”

Credit opinion (2 November 2023)

Standard & Poors: AAA, stable outlook

“We [S&P’s] think the Council of Europe Development Bank's (CEB's) loan and grant support for Ukrainian refugees in Europe since 2022 has demonstrated the bank's strong role and public policy social mandate. Ukraine's accession to the CEB was completed on June 15, 2023, and opens the way to future direct lending in Ukraine.”

“The €4.25 billion capital increase, decided by the governing board in December 2022, will benefit CEB's financial profile and reflects our [S&P’s] view of a strong relationship with shareholders.”

“The outlook on CEB is stable. We [S&P’s]  assume that, over the next two years, CEB will maintain an extremely strong financial risk profile, despite increased disbursements related to support for Ukrainian refugees in Europe and to funding that we expect CEB will provide for reconstruction of social infrastructure in Ukraine. Consequently, we expect the bank's policy importance to remain very strong, with continuous solid shareholder engagement in its activities. We  [S&P’s] also assume CEB will continue to enjoy very strong preferred creditor treatment (PCT).”

“CEB's role as a socially focused bank within Europe has solidified over the past three years. »”

“We [S&P’s] view favorably CEB's response in 2022 and 2023 to the Russia-Ukraine war”

“CEB's relevance as a multilateral lender lies in the expansion of its fiduciary activity and strengthening links with other supranationals.”

“CEB's risk-adjusted capital (RAC) ratio should improve from 27% as of Dec. 31, 2022, once the capital increase becomes effective.”

“We [S&P’s] believe CEB will retain a deep access to funding markets and adequate funding diversification.”

“CEB should be able to fully cover its balance-sheet liabilities without market access over the coming year.”

Research Update (27 June 2023)

Fitch Ratings: AAA, stable outlook

“The upgrade of Council of Europe Development Bank (CEB)’s LT IDR to ‘AAA’ from ‘AA+’ primarily reflects a strengthening in our assessment of the bank’s solvency following the approval of a new capital increase by CEB’s shareholders in December 2022. The agency now expects CEB to operate with stronger capital ratios over the medium-term. The upgrade also reflects the resilience in the bank’s loan performance (with no non-performing loan in the last decade) and a strengthening of its policy importance given CEB’s role in providing support to refugees in recent crisis, including following the Russia Ukraine conflict.”

“CEB’s ‘AAA’ rating reflects its standalone credit profile (SCP) including a ‘aa’ solvency assessment (revised from ‘aa-’ previously), ‘aaa’ liquidity and an upwards adjustment by 2 notches over the lower of its solvency and liquidity to reflect a low risk business environment.”

“Fitch has revised its assessment of extraordinary support from shareholders to 'a' from ‘a-’ at the previous review […] The propensity to support has been revised from 'weak' at the previous review. In Fitch’s view, the recent capital increase is evidence of an increased shareholders’ propensity to provide financial support to the bank.”

Fitch Ratings report (02 August 2023)
Fitch Ratings press release (18 July 2023)

Scope Ratings: AAA*, stable outlook

“The Council of Europe Development Bank’s (CEB) AAA rating reflects the supranational’s ‘excellent’ intrinsic strength and ‘high’ shareholder support.”

“The CEB benefits from the increasingly strategic role it plays for its shareholder governments and excellent governance. The bank’s social mandate – unique among European supranational institutions – has served shareholders well in helping finance their responses to the 2015 refugee crisis, the Covid-19 pandemic, and Russia’s war in Ukraine.”

“The CEB benefits from excellent asset quality with no non-performing loans and high average borrower quality. It also benefits from preferred creditor status for its sovereign exposure and good geographical diversification. The CEB’s liquidity profile is exceptionally strong, and its funding profile benefits from strong market access. The bank reports broadly stable annual net profit, allowing it to strengthen its capital base with retained earnings.”

“The CEB’s loan book benefits from a high degree of credit protection overall. The bank benefits from PCS as shown most recently during the default episode of Greece and Scope thus expects the CEB to benefit from PCS on its high share of public sector exposure.”

“The CEB’s shareholder support is assessed as ‘High’. This reflects its key shareholders’ ability and proven willingness to provide financial support in case of need.”

Press release Scope Ratings (19 May 2023)
Rating report Scope Ratings (19 May 2023)

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