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"We are delighted that after being recognised by the European Central Bank, three federal states have placed their trust in us and opted promptly for a public rating from Scope. These mandates show how strong the determination by capital market participants is to enhance European sovereignty," said Florian Schoeller, CEO of Scope Group.
The federal states are important players in European capital markets, as the largest sub-sovereign issuer group in Europe (see background below). North Rhine-Westphalia is Germany’s most populous state with the largest subnational economy. Hesse is home to Frankfurt am Main, Germany’s most important financial centre, with its international profile recently strengthened by hosting the newly created EU anti-money laundering authority. Saxony-Anhalt has recently secured important international investments with a new Intel factory near the state capital Magdeburg.
The ECB accepted Scope Ratings as a new external credit assessment institution in November 2023, making Scope’s credit ratings eligible under the Eurosystem Credit Assessment Framework (ECAF).
Dr. Marcus Optendrenk, Minister of Finance of North Rhine-Westphalia, said: "A real dream start. The fact that we were also able to convince the independent experts from Scope with our solid budgetary and financial policy and North Rhine-Westphalia received the top rating shows how much confidence the capital market has in the economic strength of our state. North Rhine-Westphalia will remain economically and financially strong in the future." (Read the original statement in German by following this link.)
Prof. Dr. R. Alexander Lorz, Minister of Finance of Hesse, said: "The good result we achieved with Scope is further confirmation of our sensible budgetary policy and the fiscal path Hesse took years ago. What is special about this rating is not just the result but the provider: Scope was the first European rating agency based in Germany to enter the market. We are happy to support this development – and benefit from the advantages of another good rating for Hesse." (Read the original statement in German by following this link.)
Michael Richter, Minister of Finance of Saxony-Anhalt, said: "The latest rating is confirmation that the State of Saxony-Anhalt continues to be one of the most reliable issuers in the capital markets and is very attractive for national and international investors. [...] We welcome the establishment of a European rating agency and are pleased to be able to offer a credit rating from our continent for the first time." (Read the original statement in German by following this link.)
Background - bond issues by the federal states: In addition to the German federal government (AAA/Stable), one of the largest issuers in European capital markets, the federal states are important borrowers. In 2023, they issued bonds worth more than EUR 42bn. The federal states also issue Schuldscheine. In total, the volume of bonds outstanding issued by the 16 federal states at the end of 2023 stood at around EUR 431bn, of which 55% represented bonds issued by the five Länder rated by Scope on a mandated basis.
- North Rhine-Westphalia (NRW): With outstanding bonds of EUR 130bn, NRW is the largest sub-sovereign issuer in Europe. The state plans to issue around EUR 10bn in 2024. NRW is also a pioneer in issuing ESG-labelled bonds as the first of the federal states to issue them in 2015 and with the highest outstanding volume at around EUR 21bn. NRW was recently recognised by Global Capital for its capital markets achievements. Scope affirmed and published NRW’s AAA rating with Stable Outlook on 26 April, 2024.
- Hesse: With outstanding bonds of around EUR 34bn, Hesse is the fourth-largest sub-sovereign issuer in Europe. The state plans to issue around EUR 6bn in bonds this year. Hesse has issued green bonds since 2021, including its second benchmark issue of EUR 1bn in 2023, the largest single green bond issue by a federal state to date. Scope affirmed and published Hesse's AAA rating with a Stable Outlook on April 19, 2024.
- Saxony-Anhalt: Saxony-Anhalt has outstanding bonds of around EUR 13bn and plans to issue around EUR 2.5bn in 2024. Saxony-Anhalt issued its first social bond in 2023. Scope affirmed and published Saxony-Anhalt's AAA rating with a Stable Outlook on January 12, 2024.
- Berlin: With outstanding bonds of EUR 45bn, Berlin is the third-largest sub-sovereign issuer in Europe and plans to issue around EUR 5.7 billion in 2024. Berlin has issued ESG-related bonds since 2023. Scope last affirmed Berlin's AAA rating with a Stable Outlook on June 2, 2023.
- Bavaria: The Free State of Bavaria has outstanding bonds of around EUR 8bn. Scope last affirmed Bavaria's AAA rating with a Stable Outlook on February 23, 2024.
Scope also rates the other federal states and bonds issued jointly by a group of federal states ("Länderjumbos"). The ratings are available on the agency’s subscription platform ScopeOne.
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