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Fitch Affirms European Stability Mechanism at 'AAA'; Outlook Stable
The ESM's 'AAA' rating and Stable Outlook is based on its intrinsic credit quality, assessed at 'aaa'. Fitch assesses the ESM's intrinsic credit quality based on a conservative medium-term scenario (the base case), under which the ESM uses its full lending capacity of EUR500 billion to provide financial support to eurozone sovereigns (EUR440 billion) and a credit line to the Single Resolution Fund (SRF, EUR60 billion) of the Banking Union. Under this scenario, Fitch assesses the ESM's intrinsic quality at 'aaa', based on 'aa-' solvency assessment and a three-notch uplift for its 'low' risk business environment. ESM's ... (full story)
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Fitch Affirms European Financial Stability Facility's Debt at 'AA'
EFSF's ratings rely on irrevocable and unconditional guarantees and over-guarantees provided by Euro Area Member States (EAMS) pro-rata their share in the capital of the European Central Bank (ECB). They are governed by an intergovernmental agreement - the Framework Agreement (FA) - and by a deed of guarantee. They ensure EFSF debt is fully covered by guarantees and over guarantees (up to 165% of original guarantees) from the most highly rated EAMS or by a cash reserve. The 'AA' rating assigned to EFSF's long-term guaranteed debt reflects the lowest rating of the guarantors providing full coverage of outstanding EFSF ... (full story)