Credit rating Aaa/AAA/AA+/AAA
The Council of Europe Development Bank (CEB) is rated by Moody's, Standard & Poor’s, Fitch Ratings, and Scope Ratings*. It enjoys a high rating (Aaa/AAA/AA+/AAA) which mirrors its strong financial profile, the support of its shareholders and its stringent risk management policy. On 10 March 2023, Moody’s upgraded the CEB’s long-term rating to Aaa ‘stable’, its highest rating. On 12 September 2022, Standard & Poor’s confirmed its AAA rating with a stable outlook. On 22 July 2022, Fitch maintained its ‘positive’ outlook for the CEB while affirming its long-term Issuer Default Rating (IDR) at ‘AA+’. On 24 June 2022, Scope Ratings affirmed its rating* for the CEB at AAA with a stable outlook. 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 decision to upgrade the ratings to Aaa is driven by Moody's assessment that CEB'screditworthiness is materially improved by the significant capital increase approved in December2022. In particular, this will lead to a reduction in the bank's leverage and has resulted in animprovement to Moody's assessment of the strength of member support. While CEB on the backof the capital increase will continue to grow its balance sheet, including by lending to Ukraine (Castable), Moody's expects that it will do so in a way that does not offset the benefits its creditprofile will derive from the capital increase. The review for upgrade was initiated on 16 December2022, driven by the CEB Governing Board's approval on 2 December 2022 of a very significantincrease of the bank's paid-in and callable capital.”
“The stable outlook reflects Moody's expectation that the benefits CEB will derive from the recently agreed capital increase will continue to strengthen the bank's credit profile, and outweigh any potential increase in risks to its asset portfolio from a gradually increasing exposure to Ukraine. It also reflects Moody's expectation that member states' strong level of support for the bank will continue to manifest itself in the formal subscription to the capital increase over the course of 2023, while Moody's does not foresee any material changes to CEB's Liquidity and Funding profile over the medium term.”
“This is the first increase of paid-in capital in the more than 65-year history of CEB, which so far has exclusively relied on retained earnings and the accession of new shareholders to boost its useable equity.”
“Moreover, the magnitude of the capital increase is testament to shareholding member states' strong support for CEB as well as the bank's enhanced relevance in tackling key social challenges in Europe.”
“The stable outlook reflects Moody's 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 for the coming 12 to 18 months.”
Press release (10 March 2023)
Standard & Poor's: AAA, stable outlook
“Ukraine's admittance and lending support provided amid war time is set to bolster the bank's relevance.”
“The stable outlook reflects our expectation that over the next two years, CEB will maintain an extremely strong financial profile, despite greater disbursement levels prompted by the coronavirus pandemic, the conflict in Ukraine, and a strong lending dynamic. We do not expect the bank's policy relevance and funding importance will diminish, with ongoing solid shareholder engagement with its activities. We also assume CEB will continue to enjoy excellent preferred creditor treatment (PCT).”
“CEB entered 2021 from a position of financial strength, with an extremely strong stand-alone capital position, and very strong liquidity and funding, despite its swift response to the COVID pandemic in 2020.”
“In our [Standard & Poor’s] opinion, CEB benefits from strong governance and risk management standards. Shareholders remain supportive and acknowledge the bank's importance as a key contributor in its niche financing segment. Member countries are directly involved in defining CEB's policy.”
“We see a positive impact on the bank's funding profile from its more active funding strategy after the switch to two-way CSAs on most derivative counterparties in 2018.
“Under our [Standard & Poor’s] liquidity stress scenario, at all horizons up to one year, CEB would fully cover its balance-sheet liabilities without market access.”
Rating report (12 September 2022)
Fitch Ratings: AA+, positive outlook
“Capital Increase Highlights Importance: In the context of the strategic plan for 2023-2027, CEB’s shareholders have approved a new capital increase of up to EUR4.25 billion (of which EUR1.2 billion is paid-in capital) to support the bank’s operations. In Fitch Ratings’ view, the first paid-in capital increase in CEB’s history highlights its growing importance for its shareholders. It will also offset rising credit risk resulting from negative sovereign rating trends and the prospect of Ukraine (CC) borrowing from the bank after its planned accession in the near future.”
“Standalone Strength Drives Ratings: Council of Europe Development Bank’s (CEB) ratings are driven by its Standalone Credit Profile (SCP) of ‘aa+’. The Positive Outlook reflects resilience in the bank’s solvency profile, which was on a positive trend pre-pandemic. Capitalisation and asset-quality metrics have remained robust despite the Covid-19 crisis and the war in Ukraine.”
“CEB’s solvency is assessed as ‘aa-’ by Fitch, driven by ‘Very Low’ solvency risks and ‘Strong’ capitalisation.”
“Liquidity buffers are rated as ‘Excellent’. Treasury assets accounted for 30% of total assets at end-2021, with the coverage of short-term liabilities by liquid assets at 2.6x at end-2021 (2.5x at end-2020) and projected to remain above the 1.5x ‘Excellent’ level over the medium term. Fitch expects CEB’s strong liquidity profile to remain a key rating strength over the medium term.”
Rating report (6 January 2023)
Fitch Ratings press release (22 July 2022)
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 (24 June 2022)
Rating report Scope Ratings (24 June 2022)
* unsolicited