Moody’s Ratings (Moody’s) has today upgraded the foreign currency issuer rating of The Currency Exchange Fund NV (TCX) to Aa3 from A1.
The outlook was changed to stable from positive.
The upgrade to Aa3 is driven by the continued strong financial support that shareholders and sponsors provide to the Fund. Last year, the European Commission (representing the European Union, Aaa stable) more than doubled its guarantee for TCX’s operations, which we consider similar to callable capital.
In addition, several development finance institutions and governments are considering becoming shareholders and financial backers of the Fund. Secondly, TCX has managed to substantially grow its business volumes – a clear indication of its competence and the relevance of its hedging products – while remaining profitable and without compromising its robust capital and liquidity metrics.
The stable outlook reflects our expectation that TCX will continue to grow its swap portfolio while maintaining solid credit metrics and attracting further financial support from existing and new sponsors. These strengths will continue to be counterbalanced by TCX’s volatile asset performance and weak development asset credit quality which reflect its focus on providing hedges on illiquid emerging- and frontier-market currencies.
Please read the full press release here.