Credit rating Aa1/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 (Aa1/AAA/AA+/AAA) which mirrors its strong financial profile, the support of its shareholders and its stringent risk management policy. On 27 July 2022, Moody’s affirmed the CEB's long-term rating at Aa1 with stable outlook. 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: Aa1, stable outlook

“We [Moody’s] assess CEB’s asset performance as “aaa”. CEB's asset quality track record is among the strongest of all the MDBs we rate.”

“We [Moody’s] consider CEB’s liquidity and funding position to be very strong with a score of “a1” 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”.”

“CEB has a “aa” score in our assessment of funding and market access. Having demonstrated the strength of its market access during the pandemic, the CEB has again been able to regularly tap debt markets at affordable rates in a context of rising interest rates globally and market turbulence sparked by the Russian invasion of Ukraine. CEB's investor base is diversified, both in terms of institution type and geography, and the banks bonds are also included in the ECB's asset purchase programmes.”

“Our [Moody’s] “+1” adjustment for quality of management reflects our long-standing view that the CEB's management (including risk management) is among the best in class. The results of this can be seen in its unusually strong asset quality, with the bank only ever recording one NPL in its history. CEB has quite stringent capital monitoring in place.”

“Relevance of CEB's mandate is increasing in the context of the humanitarian crisis in Ukraine: We [Moody’s] assess CEB’s non-contractual support as “High” given the track record of support the bank has received from shareholders but also peers and the EU since its creation (six capital increases, the latest in 2011, with no track record of arrears on capital contributions). In addition, we believe that non-contractual support has increased over the past five years, and has been further reinforced by the CEB's provision of emergency support during the pandemic shock. High non-contractual support is also reflected in other forms of financial support such as support to trust funds managed by CEB.”

Credit opinion (27 July 2022)

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

“CEB's ratings are driven by its Standalone Credit Profile (SCP), assessed at 'aa+'. The SCP reflects the lower of our solvency (aa-) and liquidity (aaa) assessments, adjusted upwards by two notches as a result of the bank's low-risk business environment. 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 ongoing war in Ukraine.”

“The bank faces ‘very low’ credit risk on its loan portfolio, reflecting its lengthy trackrecord of operating with nil non-performing loans (NPLs) and the high credit-quality of its borrowers (average rating of ‘A-’ as of end-2021).”

“CEB received strong demand from member states in 2020 and 2021 to provide funding to governments to address the health needs and social impact resulting from the pandemic, in line with the bank's social mandate. More recently, the bank has provided financing to governments and local authorities that support resettlement and assistance to Ukrainian refugees. In a sign of solidarity, CEB’s member states have approved the accession of Ukraine to the Bank with zero capital cost to the sovereign”

“CEB’s solvency assessment benefits from ‘low’ concentration risk (top 5 obligors account for 21% of the total end-2021), its ‘very low’ market and equity risk and ‘strong’ risk management policies”

“CEB's 'aaa' liquidity assessment reflects the bank's excellent liquidity buffers, strong credit quality of its treasury portfolio (54% rated above 'AA-' at end-2021), and strong access to capital markets.”

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)

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