KBRA Affirms AAA/K1+ Ratings for the European Investment Fund; Outlook Stable

KBRA Europe (KBRA) affirms its AAA long-term issuer rating for the European Investment Fund (EIF). KBRA also affirms the supranational’s K1+ short-term issuer rating. The Outlook on the long-term rating is Stable.

KBRA's credit ratings for the EIF reflect strong shareholder ability and willingness to support the institution, reflective of its ownership and relevance to the European Union’s policy objectives. KBRA notes EIF’s vital role in providing finance to small- and medium-sized enterprises, including through the InvestEU programme, REPowerEU plan, and European Tech Champions Initiative. These considerations are also important to the EIF’s mandate. The institution’s capital position is strong, reinforced by the 2021 capital injection to support the post-pandemic expansion of its business activities. EIF’s capital position also benefits from internal capital generation and a dividend distribution rate cap. EIF's long track record of limited guarantee calls and its average credit quality of guarantees at rating category ‘A’, based on EIF’s internal rating approach, both support KBRA’s strong evaluation of asset quality. Structural credit enhancements on private equity investments and EIF’s exposure to senior tranches are also key for asset performance. EIF’s liquidity position is strong, benefitting from a large portfolio of liquid assets on its balance sheet and predictable cash flow needs, and also considers that EIF has no debt outstanding. Prudent governance across all facets of operations, including risk management and operating practices, supports the credit ratings.

The ratings were solicited by a third party. The rated entity or related third party did participate in the rating process and KBRA did not have access to management and internal documents.

To access ratings and relevant documents, click here.

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