Standard & Poor’s has today downgraded the rating of the Croatian Bank for Reconstruction and Development (HBOR) for long-term and short-term borrowing from ‘BBB-/A-3’ to ‘BB+/B’, with a stable outlook, in line with the downgrade of the Republic of Croatia’s rating on Friday.
– We assess the probability of the state providing extraordinary support to HBOR in case of financial difficulties as ‘almost certain’, and sufficient and timely – states S&P’s announcement.
S&P bases this assessment on the fact that HBOR plays a crucial role in achieving the key economic, social, and political goals of the Government, particularly in the development of the Croatian economy and the promotion of exports.
It is also based on the integral connection of HBOR with the Croatian Government through complete state ownership, the representation of the Government on HBOR’s supervisory board, and the financial support of the Government in the form of regular annual contributions to HBOR’s capital and statutory mandatory guarantees, ensuring that HBOR can repay its debts.
The stable outlook for HBOR’s rating also reflects the stable outlook for the rating of the Republic of Croatia, S&P notes, emphasizing that it will change in accordance with the outlook for the rating of the owner, the Croatian state.
