Fitch Ratings affirmed the national long-term rating of Tunisia-based Caisse des Prêts et de soutien des Collectivités Locales (CPSCL) at ‘AA (tun)’ with a stable outlook. Fitch also affirmed CPSCL’s domestic short-term rating at ‘F1+(tun)’.
Fitch classifies CPSCL as an entity linked to the Tunisian government due to the very strong ties between the entity and the Tunisian state and its strong incentive to support CPSCL, as evidenced by the high proportion of debt guaranteed by the state.
More than 80% of CPSCL’s debt by the end of 2021 benefits from the government’s first call guarantee. This equates to CPSCL borrowing from the European Investment Bank and the French Development Agency to support local governance, particularly in newly created municipalities. Fitch expects the proportion of secured debt to remain high in the medium term.
Fitch views CPSCL’s debt to remain modest at 0.3% relative to government debt. However, as the government fully guarantees a large portion of CPSCL’s debt with bilateral and multilateral agencies, a default could damage the government’s reputation and funding costs, with knock-on effects on public sector companies’ access to loans.
Written on 26/10/22 10:18