Which is why BayernLabo is rated Aaa by Moody's. What’s more, with the zero-risk weighing under the Solvency Regulation in effect, credit institutions investing in BayernLabo’s debt instruments do not need any capital backing nor are they eligible for the large exposures regime. Which in turn means that BayernLabo is able to draw on a broad investor base.
To raise funds on the capital markets, BayernLabo issues:
- large-volume and correspondingly liquid benchmark bonds
- Schuldschein loans
- registered bonds
- bearer bonds
- structured products
Since the euro is the only currency used on the lending side, the refinancing is executed exclusively in EUR.
Credit status and rating
Excellent credit status coupled with a top rating
Aaa — with a state guarantee
One of the reasons why BayernLabo’s debt obligations are so attractive is their credit rating, which is excellent because of the unconditional, permanent and irrevocable guarantee provided by the Free State of Bavaria. For investors, this puts BayernLabo’s debt obligations on a par with those of Bavaria, Germany’s largest federal state.
The Free State of Bavaria holds a Aaa/AAA rating from Moody’s and Standard & Poor’s – the highest possible scores.
Based on this strong guarantor, BayernLabo’s long-term bonds enjoy a Aaa rating by Moody's.
Excellent sustainability rating
The unsolicited ratings awarded by established and well known sustainability rating agencies also attest to BayernLabo's outstanding sustainability performance, even by international standards.
A+ - D-
9,5 (negligible risk)
0 – 100
|Sustainable Fitch||2 (good ESG profil)||1 – 5|| |
These top ratings in the area of sustainable management make BayernLabo a global industry leader.
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Legal form and liability
BayernLabo — a development bank with a state guarantee
100% state-guaranteed by the Free State of Bavaria, for all obligations
BayernLabo is a legally dependent but organisationally and financially independent body established under public law within BayernLB, which itself is an institution established under public law (Anstalt des öffentlichen Rechts). Following a decision by the European Commission, BayernLabo, as a legally dependent development bank, continues to benefit from the guarantee obligation of the Free State of Bavaria (Article 22 para. 1 sentence 1 of the Bayerische Landesbank Act (BayLaBG)) as well as from a refinancing guarantee provided by the Free State of Bavaria (Article 22 para. 2 BayLaBG) beyond 18 July 2005.
Pursuant to Article 22 para. 2 BayLaBG, the Free State of Bavaria shall be directly and fully liable for the loans raised by BayernLabo, for Pfandbriefs, mortgage bonds and other bonds it issues, for forward deals made as forward transactions, for rights from options and for loans to third parties, insofar as these loans are expressly granted by BayernLabo. This refinancing guarantee is payable on demand.
The guarantee defined in Article 22 para. 2 BayLaBG is unconditional, permanent and irrevocable and can only be rescinded, limited, or amended by a state law. Any such rescindment or amendment, however, would apply only to transactions concluded after such a law came into effect.
The Free State of Bavaria is rated Aaa/AAA by leading rating agencies Moody’s and Standard & Poor’s. Bavaria's excellent credit rating supports and underscores its outstanding capability as guarantor to BayernLabo.
BayernLabo’s business model
Housing development and financing for regional authorities in Bavaria
Article 20 of the Law on Bayerische Landesbank stipulates BayernLabo’s sphere of activity. As an organ of state housing policy, BayernLabo has the statutory mandate to promote housing and urban development in Bavaria.
The key goals of BayernLabo’s fiduciary development programmes, financed by the Free State of Bavaria, are as follows:
In the Bavarian residential construction programme
- Construction of rental housing; construction and purchases of privately-owned housing
- Creation of student housing and residences for the disabled
The key goals of BayernLabo’s proprietary development programmes, refinanced either through development programmes originated by the KfW Group or via the capital markets, are as follows:
In the Bavarian modernisation programme
- Modernisation of rental housing and residential care homes for the elderly
In the Bavarian low interest rate loan programme
- Construction and purchases of privately-owned housing
In the Bavarian municipal investment loan program
- Financing of infrastructure projects
BayernLabo has been a lender to the Bavarian state and local authorities since 2006. The legal basis for this was brought about by a change to the Law on Bayerische Landesbank (BayLBG) on 19 July 2005 (implementing a second agreement struck between the EU Commission and the German Federal Government). When it comes to lending to state and local authorities, BayernLabo conducts business exclusively with Bavarian borrowers.
Sustainability and responsibility
BayernLabo – supporting sustainability since 1884
BayernLabo has been supporting sustainable growth in Bavaria since its foundation in 1884, thereby fulfilling its social and corporate responsibility.
Today BayernLabo is a legally dependent institution established under public law within BayernLB, though it is organisationally and financially independent. It is vested with the legal mandate to promote social housing and municipal construction in Bavaria.
BayernLabo is committed to this public mandate. In fulfilling its own, broader responsibilities, the Free State of Bavaria can rely on the products and services of this organ of state housing policy. Bavaria’s housing policy pursues two equally prioritised goals: keeping urban regions economically strong and livable, and improving the quality of life in rural areas. These two aims guide, and are main pillars of, BayernLabo's business activities.
A lender to Bavarian state and local authorities since 2006, BayernLabo conducts business exclusively with Bavarian borrowers. In doing so, it focuses primarily on subsidising investments in the general municipal and social infrastructure.
To help finance new and existing loans under the Bavarian low interest rate loan programme, which was launched to promote home ownership; the Bavarian modernisation programme; and the municipal investment loan programme, which aims to create rental housing in Bavaria, BayernLabo issued its first social bond in November 2017.
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