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2015/04/17 / Erste Group Research
The asset review at Heta Asset Resolution AG has revealed an additional capital shortfall. As a first measure, a moratorium on the bulk of Heta's liabilities (excl. covered bonds) until 31.5.2016 has been imposed. In our opinion, the further approach to Heta's wind-down depends on a variety of factors, among which there is especially the potential trigger event for the deficiency guarantees. The Heta proceedings are also affecting other institutions in Austria's banking market (e.g. guarantees for the Pfandbriefstelle of the mortgage bank sector). In the SSA segment the reevaluation of guarantees should lead to greater differentiation between individual issuers. A Heta debt haircut could possibly lower the volume of the province's guarantees, legal uncertainty will however remain high. In our opinion, Heta could become an important catalyst for reform in Austria, and cast fiscal equalization in a fresh light as well. Even though Austria's economic growth has exhibited above-average strength over the past decade, this trend has come to an end in 2014. We expect that Austria's GDP growth will remain below that of the euro area in both 2015 and 2016. Effective reforms are required to fuel mid-term growth prospects.

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General information

AuthorErste Group Research
Date2015/04/17
Languageen
Product nameCredit News
Topic in focusCredits/ Corporate bonds, Macro/ Fixed income
Economy in focusAustria
Currency in focusEuro
Sector in focus-
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