(The following statement was released by the rating agency)
LONDON, April 24 (Fitch) Fitch Ratings has downgraded the Bank of England's
(BoE) Long-term Issuer Default Rating (IDR) to 'AA+' from 'AAA' following the
downgrade of the UK sovereign rating on 19 April 2012. The senior unsecured
Short-term rating has been affirmed at 'F1+'. The Outlook is Stable.
KEY RATING DRIVERS
BoE's Long-Term IDR is directly aligned with that of the UK government. The BoE
is the monetary arm of the UK sovereign and as such its credit profile is
aligned with that of the sovereign government.
While central banks have unlimited capacity to create base money, in practice
the net present value of seigniorage, the profit from money creation, is limited
and typically channelled to the government. This reinforces the close link
between the central bank and the sovereign ratings. The monetary financing
flexibility and the international reserve currency status of the sterling are
already reflected in the UK's sovereign ratings.
Fitch currently rates only the BoE's three-year-maturity USD bonds. The rating
does not apply to typical central bank liabilities of the BoE, like bank notes
or commercial banks' reserves that are monetary liabilities rather than rateable
The BoE's rating reflects its central role in the UK and international financial
system. The rating is underpinned by support from the UK sovereign. The near
certainty of sovereign support for the BoE derives primarily from its national
strategic importance, as well as its ownership by the UK Treasury.
On 19 April 2013 Fitch downgraded the UK's sovereign ratings to 'AA+' from 'AAA'
(see 'Fitch Downgrades United Kingdom to 'AA+'; Outlook Stable' on
www.fitchratings.com). The downgrade of the UK's sovereign ratings primarily
reflects a weaker economic and fiscal outlook and hence the upward revision to
Fitch's medium-term projections for UK budget deficits and government debt.
Nevertheless, the UK's 'AA+' rating and Stable Outlook reflect its extremely
strong credit profile.
The rating is sensitive to any further changes in the UK sovereign rating.
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London E14 5GN
+44 20 3530 1175
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Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email:
Additional information is available on www.fitchratings.com
Applicable criteria, 'Sovereign Rating Methodology, dated 13 August 2012 and
'Country Ceilings' dated 13 August 2012 are available at www.fitchratings.com.
Applicable Criteria and Related Research
Sovereign Rating Methodology
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