The Standard & Poor's rating agency on Monday downgraded the credit rating for the Croatian Bank of Reconstruction and Development (HBOR) for long-term and short-term loans from 'BBB-/A-3' to 'BB+/B', along with a stable outlook in the wake of Croatia's rating being downgraded.
We assess as "almost certain" the likelihood that the sovereign would provide sufficient and timely extraordinary support to HBOR in the event of financial distress. We base our assessment of HBOR on our view of the bank's, S&P's press release notes.
S&P bases their assessment on the fact that HBOR has a critical role in meeting key economic, social and political objectives of the government, particularly in the devleopment of the Croatian economy and the promotion of the country's exports.
S&P notes the integral link with the Croatian government through full state ownership, the government's representation on HBOR's supervisory board and the government's ongoing financial support in the form of regular annual contributions to HBOR's capital and statutory unconditional guarantees, ensuring HBOR can repay its debts.
The stable outlook on HBOR reflects the outlook on the rating of the Republic of Croatia, S&P said, noting that ratings could be revised if Croatia's ratings or outlook were changed.
