Moody's: Swiss franc shock likely to leave French RLGs and banks unscathed.
Summary: Moody's notes that over the past few years
-- The Swiss National Bank's (SNB) decision to remove its cap on the Swiss franc's exchange rate with the euro is unlikely to inflict major damage on French regional and local governments (RLGs), or on banks exposed to the RLG sector, says Moody's Investors Service EMEA Limited in a report published today.
Moody's report is available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release.
"Although we do not rule out the possibility of some RLGs facing acute financial stress in the coming months, the impact on the French RLG sector's overall financial strength is likely to be limited. French RLGs'
overall exposure to CHF/EUR -indexed loans is concentrated on a limited number of entities, and has been receding in the last few years," says Daniel Marty, associate analyst at Moody's.
Moody's notes that over the past few years, French RLGs have already negotiating with banks to progressively exit their EUR/CHF indexed loan contracts, as well as have had support from a EUR1.5 billion state support fund set up in 2014 which has helped local governments cover the cost of converting their structured loans into conventional debt.
While there is no up-to-date publicly available estimate for the sector as a whole, information collected by Moody's from lenders points to about
aAeu3 billion of exposure (1.7% of RLGs' and hospitals' total debt) for less than 500 entities. Moreover, any material impact on the remaining exposed entities would only emerge over time, and will therefore depend on future exchange rate movements, according to Moody's.
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|Publication:||EMBIN (Emerging Markets Business Information News)|
|Date:||Jan 28, 2015|
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