Supranationals - Europe 228 EuroWeek Financing supranationals and agencies Eurofima Rating Aaa, AAA, NR André Bovet Chief executive officer Martin Fleischer Chief financial officer Michele Montefiori Head of capital markets operations Urs Thomann Head of treasury operations KEY OFFICIALS The European Company for the Financing of Railroad Rolling Stock (Eurofima) is a supranational organisation located in Basel, Switzerland. It was established in 1956 by a State Treaty signed by 25 European member states. Eurofima fulfils a non-profit maximizing mission to support the development of rail transportation in Europe. It supports its shareholder railways as well as other railway bodies in renewing and modernising their equipment. OVERVIEW Risk weighting (Basel II): 20% (standardised) / 14% (IRB) Guarantee: Extensive coverage of loan assets by collateral and sovereign guarantees. Joint shareholders’ guarantee against any loan default not covered by this and exceeding Eurofima’s fund for general risks and reserves. RISK WEIGHTING / GUARANTEE Source: Markit bp 3-Aug-2009 3-Sep-2009 3-Oct-2009 3-Nov-2009 3-Dec-2009 3-Jan-2010 3-Feb-2010 3-Mar-2010 3-Apr-2010 3-May-2010 3-Jun-2010 3-Jul-2010 3-Aug-2010 3-Sep-2010 3-Oct-2010 3-Nov-2010 3-Dec-2010 3-Jan-2011 3-Feb-2011 3-Mar-2011 -10 0 10 20 30 40 50 ASSET SWAP SPREAD 6.125% GBP OCT 2014 *Estimated & unaudited. **Forecast. Source: Eurofima Sfr bn 0 1 2 3 4 5 6 2005 2006 2007 2008 2009 2010* 2011** GROSS BOND ISSUANCE Data estimated & unaudited. Source: Eurofima % Listed issues 90 Unlisted issues 10 ISSUANCE BY TYPE (2010) Data estimated & unaudited. Source: Eurofima % 2012 8 2013 31 2014 9 2018 1 2019 3 2020 13 2021 12 2022 17 2023 2 2025 3 ISSUANCE BY MATURITY (2010) Standard & Poor’s AAA, stable outlook Strengths • High asset quality and extensive coverage of loan assets by collateral and top-rated sovereign guarantees • Shareholders’ guarantee against any loan default not covered by collateral, the defaulting railway’s member state and exceeding Eurofima’s guarantee reserve Weaknesses • Eurofima’s capitalisation and liquidity ratios are below its AAA rated peers and had been declining until 2008. Since then steps have been taken to bolster those ratios The stable outlook balances S&P’s view of Eurofima’s very strong asset quality with its still high leverage compared with peers. S&P expects that management will pursue its strategy to further strengthen its capital, asset quality, and liquidity. Failure to implement these policies could lead to downward pressure on the rating. A privatisation of one of the major shareholders’ railways and/or its departure from Eurofima membership could also put pressure on the ratings, as would an unexpected deterioration of Eurofima’s asset quality. However, S&P considers the likelihood of such events to be very low over the coming years. KEY RECENT RATING AGENCY COMMENTARY