Issuer Debt Rated Rating Trend

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1 Rating Report Previous Report: 7 April 2017 Analysts Javier Rouillet jrouillet@dbrs.com Nichola James njames@dbrs.com Kingdom of Ratings Issuer Debt Rated Rating Trend, Kingdom of Long-Term Foreign Currency Issuer Rating A (low) Stable, Kingdom of Long-Term Local Currency Issuer Rating A (low) Stable, Kingdom of Short-Term Foreign Currency Issuer Rating R-1 (low) Stable, Kingdom of Short-Term Local Currency Issuer Rating R-1 (low) Stable Rating Rationale On, DBRS Ratings Limited (DBRS) confirmed the Kingdom of s Long-Term Foreign and Local Currency Issuer Ratings at A (low) and its Short-Term Foreign and Local Currency Issuer Ratings at R-1 (low). The trend on all ratings is Stable. continues to grow strongly and to outperform the euro area average, with GDP and employment set to expand for a fourth year in a row in Key indicators suggest that the Spanish economy has become more competitive, flexible, and resilient since the crisis. The gain in competitiveness, which has supported a shift to current account surpluses amid the sharp deleveraging in the private sector, underscores the likely sustainability of the recovery. The recent strengthening of the euro is partially offset by overall better prospects for Spanish export markets. DBRS expects growth to remain above trend in coming years, albeit at a slower pace as the tailwinds associated with monetary policy and oil prices lose strength, the fiscal stance becomes less expansionary, and the output gap closes. The Region of Catalonia s bid for independence has increased political tensions in the past few months. Ahead of the planned referendum, which was declared illegal by Spanish Constitutional Court, market reaction was contained, with no indication of spillovers to the real economy. However, financial market volatility has intensified in the aftermath of the vote. There is a risk that the standoff escalates. A period of prolonged and elevated tension in Catalonia or political uncertainty in at large could weigh negatively on the economy and public finances. (Continued on page 2.) Rating Considerations Strengths (1) Large and diversified economy (2) Progress on structural reforms (3) Competitiveness gains (4) Benefits of euro area membership Summary Statistics Challenges (1) High levels of public debt (2) Catalonia s bid for independence (3) Sizeable net external liabilities (4) Boosting potential growth Fo r the year ended Decemb er E F Nominal GDP (EUR billions) 1,080 1,119 1,163 1,209 GDP per capita (EUR) 23,177 23,970 25,029 25,982 Real GDP (% chg) 3.4% 3.3% 3.1% 2.5% Unemployment rate (avg, %) 22.1% 19.6% 17.1% 15.1% Inflatio n (avg, %) -0.5% -0.2% 1.9% 1.3% Current account balance (% GDP) 1.1% 1.9% 2.1% 2.3% External debt (% GDP) 168.5% % n.a. n.a. General gov't balance (% GDP) -5.1% -4.5% -3.1% -2.6% Primary b alance (% GDP) -2.0% -1.7% -0.3% 0.1% Gross Public Debt (% GDP) 99.4% 99.0% 98.8% 97.6 % Human Develo p ment Index 0.88 n.a. n.a. n.a. 120% 100% 80% 60% 40% 20% : Gross General Government Debt (%GDP) 0% F 1 Sovereign Ratings Group * Includes financial-sector support. Sources: UNDP, IMF, National Statistics Office (INE), Bank of, Ministry of Finance and DBRS.

2 Rating Rationale (Continued from page 1.) The Stable trend reflects DBRS s view that the risks are balanced. Provided that tensions relating to the situation in Catalonia are contained, upward pressure on the ratings is likely if recent economic and fiscal performance continues. Alternatively, a weaker political commitment to fiscal adjustment, a material downward revision to the growth outlook, or the materialisation of a sizeable contingent liability could adversely affect the ratings. A severe deterioration of the political environment, leading to a high degree of uncertainty affecting business investment, consumption and the country s public finances, could also adversely pressure the ratings. Several strengths underpin the ratings. s large and diversified economy is the fourth largest in the euro area. Export-driven growth has led the recovery since the crisis. Growth contributions have recently become more balanced due to strengthened domestic demand. Investment, excluding construction, is at pre-crisis levels. This happened at the same time that the private sector is making significant efforts to deleverage, which is important, as current private debt levels remain high relative to GDP. Strong job creation, better economic conditions, and higher confidence among consumers and businesses also support growth. The return of confidence and stronger bank capitalisation and balance sheets has improved financing conditions and access to credit. Past reforms have played a key role improving the flexibility, resiliency, and competitiveness of the economy. These reforms helped improve the functioning of the labour market and remove some of the hurdles to growth. A more flexible labour market, and less restrictive product and services regulations have boosted job creation and improved the business climate. s cost competitiveness has improved significantly relative to trade partners. Unit labour costs declined 6.8% in between Q and Q2 2017, driven by a combination of wage moderation and productivity gains. By comparison, average costs increased 5.5% in the euro area. The progress in cleaning-up and restructuring the banking sector has been vital to its stabilisation, restoring confidence in the sector and improving the flow of credit to the economy. s Eurozone membership reinforces its credit strength. Membership allows financial support in the event of a shock and gives the country full access to Europe s trade, financial, and banking sectors. Financial conditions have improved in due to the European Central Bank s (ECB) asset purchase programme, refinancing operations, and other monetary policy operations, as well as the improved condition of s banks. Some credit challenges offset these strengths. The high level of sovereign indebtedness burdens the government and increases its vulnerability to shocks. The high debt ratio limits the fiscal space available. However, DBRS expects the debt-to-gdp ratio to decline gradually over the medium term. Gross financing needs remain high, but are declining. Prudent debt management and strong demand for Spanish government bonds mitigate rollover risks. Catalonia s bid for independence has progressively escalated political tension over the past few months. While DBRS expects uncertainty over Catalonia to persist in the near to medium term, the central scenario is that of continuity for. This reflects legal and institutional safeguards that make a unilateral secession highly unlikely. Going forward, DBRS will continue to monitor how discussions evolve. Given the size and importance of the region in, continued uncertainty associated with independence could weigh on the Spanish economy. s negative net international investment position remains high, at 85.7% of GDP in This leaves the country exposed to shocks or shifts in investor sentiment. Net marketable debt accounts for most of this position, at 76.5% of GDP in The cost of servicing fixed income liabilities is less sensitive to the economic cycle than equity liabilities. However, is likely to post a fifth consecutive current account surplus in Despite the improvements, high structural unemployment and productivity limit potential growth. In spite of the significant employment gains, the unemployment rate is still very high (17.2% in Q2 2017). Long-term and youth unemployment have been declining, but are still high. At the same time, the labour market duality continues to be widespread. The large proportion of small firms with lower productivity levels relative to other 2 Sovereign Ratings Group

3 large European peers partially explains s low productivity. The government is implementing measures to address labour market imbalances and to spur an increase in firms size. Foreign versus Local Currency Ratings The Spanish Treasury issues debt mainly in euros. Only 0.3% of central government debt was denominated in foreign currency in Given this composition, constraints in servicing foreign currency securities are likely to be minimal. Moreover, as a complying member of the Eurozone, is unlikely to differentiate among its debt obligations based on currency denomination. DBRS therefore rates the foreign and local currency debt at the same level. Fiscal Management and Policy 4 : Fiscal Balance (as % of GDP) 16.0 Reduction in the structural primary deficit (%of GDP) Central Govt Autonomous Community Local Government Social Secuity Funds General government Sources: General State Comptroller (IGAE), IMF, Haver Analytics and DBRS. s fiscal position deteriorated materially during the crisis, driven by revenue shortfalls, a steep increase in social expenditures, and one-off bank recapitalisation costs. In response, has undertaken an important structural fiscal adjustment, especially between 2009 and However, a deterioration in the structural primary balance in 2015 and 2016 resulted from lower-than-expected personal and corporate income tax revenues (linked to the tax reform that came into force in 2015), and some spending overruns. Political fragmentation and austerity fatigue have hindered a more aggressive consolidation efforts. The fiscal stance is expected to remain rather neutral, and the reduction of the headline deficit will largely depend on the economic recovery. On the back of a job-rich recovery, DBRS considers that the government is on track to achieve its 3.1% of GDP deficit target for 2017, representing a reduction of 1.4pp relative to 2016, and leaving the deficit well below its 11% of GDP in Budgetary execution numbers show a solid pace of public revenue growth (taxes and social contributions) amid a benign economic environment. Public spending as a share of GDP is expected to decrease. The materialisation of cost linked to toll motorways, originally distributed between 2017 and 2018, is now expected to impact fully in 2018 (0.3% of GDP). Due to the apparent lack of sufficient support in Congress at the moment, the government will most likely rollover the 2017 budget and aim to pass a 2018 budget at the start of next year. Regional government finances, which were at the heart of the fiscal slippage in 2015, have improved. Tighter monitoring, spending control, and higher revenues have led to an expected improvement in the overall deficit for the regional governments from 1.7% in 2015 to expectedly 0.6% in 2017, according to s Stability Programme Update However, spending pressures could not be discarded in the future, especially during the next regional electoral cycle. On the other hand, in spite of the improving labour market figures, the social security fund is expected to remain posting deficits above 1% of GDP until 2020, according to AIReF ( s fiscal watchdog). However, the reforms introduced to the pension system (2011/2013) will progressively contain the ageing population pressures. The ongoing discussions over reforms of the social security and regional financing system need broad political agreement to progress further, which has been difficult to achieve so far Sovereign Ratings Group

4 The government envisages a reduction of the structural deficit to 1.6% of GDP by 2020 on the back of expenditure control. This would contribute to the projected percentage point drop in the debt ratio in Debt and Liquidity The level of the government debt ratio continues to be a key weakness. Public indebtedness grew rapidly during the financial crisis, increasing vulnerability to shocks. The combination of high deficits, a prolonged period of low or negative GDP growth, and contingent liabilities from regional government finances and bank recapitalisation have pushed up the debt to GDP ratio to 99% in 2016 from 39.5% in Government intervention in the financial system amounted to 4.6% of GDP from 2008 to DBRS expects the debt to GDP ratio to decline gradually over the medium term. While real growth decelerates and converges toward its potential rate (1.5%), an improving primary balance and higher inflation (GDP deflator) would help reduce the debt ratio. As the ECB gradually unwinds its unconventional monetary policy, funding costs for the Spanish government are set to increase. However, the interest burden would remain relatively stable as the impact of higher interest rates would be largely offset by relatively lower levels of indebtedness. 125% 120% 115% 110% 105% 100% 95% 90% 85% 80% : Gross Debt % GDP (Baseline vs Adverse Projections) Combined shock Primary balance shock Growth shock Contingent liabilities shock % 106% 102% 99% 98% 94% 12% 10% 8% 6% 4% 2% : Cost and Life of Debt (Central Government) Cost of Debt Outstanding Cost at Issuance Average Life of Debt Outstanding (in years, rhs) Baseline Interest rate shock 0% Note: For the purposes of the debt sustainability analysis, the baseline scenario is based on projections from the International Monetary Fund s (IMF) World Economic Outlook (April 2017). The growth shock assumes an average growth of 1.9pp lower in The primary balance shock assumes a fiscal slippage from the baseline on average of 1.6pp. The contingent liability shock is assumed at 3.9% of GDP. The interest rate shock assumes an additional 130bps to the nominal interest rate baseline for Sources: Bank of, Spanish Treasury, Ministry of Economy, Federal Reserve Board, IMF, Haver Analytics and DBRS. The high level of government debt leaves vulnerable to shocks. According to DBRS s public debt sustainability analysis, the main risks to the debt ratio emanate from the growth and primary balance shocks. Under a combined shock scenario, which DBRS considers a very low probability event, the debt ratio would come under significant pressure, reaching 122% of GDP by Risks associated to the government s outstanding guarantees have diminished significantly, from a peak of 17.1% of GDP in March 2013 to 9% in June 2017, according to the Bank of. Moreover, Bank Recovery and Resolution Directive (BRRD) implementation significantly reduces the likelihood of financial institutions bail-outs. Gross financing needs remain elevated, at 19.8% of GDP in 2016, but expected to drop relative to GDP in coming years. Prudent debt management and strong demand for Spanish government bonds mitigate rollover risks. Similar to other European sovereigns, has benefited from the ECB s ultra-loose monetary policy, including the Public Sector Purchase Programme (PSPP). The government has taken advantage of the low cost of issuance in recent years, both to reduce the cost of financing on outstanding debt (3.7% in 2013 to 2.6% in August 2017) and to lengthen the debt profile (6.2 years in 2013 to 7.1 years in August 2017). Longer average debt maturities have helped to reduce rollover risk. 4 Sovereign Ratings Group

5 Economic Structure and Performance The Spanish economy continues to outperform the euro area, with GDP and employment set to expand for a fourth consecutive year in In recent years, the Spanish economy has benefited from tailwinds, such as ultra-loose monetary policy, lower oil prices, and a weaker euro. However, s growth differential relative to the euro area likely has been underpinned by past reforms and a wider output gap. In particular, past reforms have played a key role improving the flexibility, resiliency, and competitiveness of the economy. The Spanish growth pattern has changed following the economic and financial crisis. A credit-fuelled expansion pre-crisis, which ended with the collapse of the real estate market and banking crisis in, has been followed by an export-led recovery. On the back of competitiveness gains, real exports expanded 41% between 2009 and Between 2009 and 2016, the sharp contraction in construction and financial services value added has been roughly offset by expansion in the rest of the Spanish service sector, mostly export oriented. A significant shift in resources towards the service sector has coincided with ample job creation in this sector. While the export sector now represents a larger portion of the economy, the growth pattern has become more balanced in recent years. Since 2014, domestic demand has been the main contributor to economic growth. A job-rich recovery, pent-up demand and higher confidence have boosted private consumption. Investment, excluding construction, was just shy of its pre-crisis levels in Both exports and imports expanded rapidly in , with net exports contributing 0.5 percentage points in After a stronger than expected first half of the year, real GDP growth is projected to be 3.1% in The strengthening of the euro this year is to some extent likely to be offset by better prospects for Spanish export markets. Going forward, growth is expected to continue albeit at a slower pace. In particular, a slowdown in growth could ensue as the tailwinds disappear, the output gap closes, and the fiscal stance becomes less expansionary. On the external side, risks stem from potential trade protectionism, the U.K. s departure from the European Union, and fragilities in emerging markets. On the domestic front, a period of prolonged and elevated tension and political uncertainty could negatively impact the Spanish economy through the confidence channel (investor, consumer and business) : Real GDP growth drivers (Q1 2007=100) GDP Private consumption Govt Consumption Investment Exports Imports : Labour market developments Employed (mn, rhs) Unemployment rate (%) Youth unemployment rate (%) Long-term unemployment (%) Sources: INE, Haver Analytics and DBRS Despite the improvements, high structural unemployment and productivity limit potential growth. In spite of the significant employment gains, with 1.9 million new jobs created since the start of 2014, the unemployment rate is still very high (17.2% in Q2 2017). Long-term and youth unemployment have been declining, but are still high. At the same time, the labour market duality continues to be widespread. The large proportion of small firms (in 2013, 95% of companies had fewer than ten employees) with lower productivity levels relative to other large European peers partially explain s low productivity. The government is implementing measures to address the labour market imbalances and spur firms growth but their results will only be materialise gradually. 5 Sovereign Ratings Group

6 Monetary Policy and Financial Stability After coming under severe stress with the real estate market collapse and economic downturn, the health of the Spanish financial system has improved significantly. The clean-up and restructuring of the banking sector, in the context of the government s financial rescue plan ( ), was vital to its stabilisation and for shoring up confidence in the system. The Spanish banking system is now more concentrated and efficient. The strong economic recovery and improving real estate market is helping the banking system to address its legacy challenges. Spanish banks have improved their capitalisation levels, boosting their resiliency to shocks. The common equity tier 1 ratio for Spanish deposit institutions stood at 12.6% in by Q2 2017, surpassing the regulatory requirement, but still 1.7 percentage points below the EU average. However, the relative position of the Spanish banks improved in terms of leverage ratio. Amid ample access to euro system liquidity, Spanish banks domestic loanto-deposit ratio dropped to 109.4% in July 2017 from a peak of 170.5% in October Despite the progress, sizable legacy assets remain a challenge to Spanish banks. The NPL ratio for domestic banking business stood at 8.5% in July 2017 (still higher than the average of the EU banks), down from 13.6% in December The construction and real estate sectors continue to show the highest NPLs (26%). The starting point and progress in disposing these non-performing assets has varied across banks. Therefore, a few banks have a longer way to go to bring their exposures more in line with the EU average. For domestic exposures, the provisioning for doubtful loans increased markedly since the onset of the financial crisis, with the coverage ratio reaching 45.7% in March 2017 from 29% in September % : Non performing loans (as % of respective category) 120 Ratio of NPLs net of provisions to capital (%) 35% 30% 25% NPLs - Corporate construction + real estate NPLs - Corporate excl construction + real estate NPLs - Household NPLs - Corporate NPLs - Total Q Q % 60 15% 40 10% 20 5% 0% 0 Sources: Bank of, IMF, Haver Analytics and DBRS. Note: The ratio of NPLs net of provision to capital is on cross-border, crosssector consolidation basis (Financial Soundness Indicators, IMF). The Spanish households and corporates continue to deleverage while access to credit has improved. From the maximum in June 2010, the non-financial private sector debt-to-gdp ratio has dropped 52.3 percentage points to 165.2% in Q In line with this, outstanding loans to the private sector continued to contract (-2.1% yoy in July 2017) albeit at a slower pace. The surge in new lending for consumption and SMEs is limiting the pace of credit contraction. The swift resolution of Banco Popular, entailing the sale of Banco Popular to Banco Santander, ensured the continuity of its operations and preserved financial stability. Consolidation efforts in the system are proceeding, with the potential merger of state-owned Bankia and Banco Mare Nostrum both majority owned by the Fund for Orderly Bank Restructuring (FROB) approved by their respective boards of directors. The divestment deadline has been delayed by two years. Similar to other European economies, profitability is below pre-crisis levels. The ultra-low interest rate environment, banks limited scope to further lower funding costs, and to a lesser extent the challenges to increase the banks loan book constrain profitability of Spanish banks. However, overall profitability has been relatively stable, as improving asset quality and cost control have offset the impact of lower net interest and other income. 6 Sovereign Ratings Group

7 Balance of Payments Since 2007, has experienced a significant external adjustment. The current account balance shifted from a 9.6% of GDP deficit to a surplus of 1.9% of GDP in The strong performance of the export sector has been crucial for this rebalancing and led to a significant increase in its share of GDP, from 26% in 2007 to 33.1% in Over the same period, goods, travel services, and other services exports as share of GDP increased by 5.1%, 0.9%, and 1.4% respectively. While the sharp drop in imports due to the contraction of domestic demand partially explained the rebalancing at the onset of the crisis, the level of imports as share of GDP has roughly returned to its 2007 levels. Although cyclical or temporary factors, such as exchage rate or energy prices fluctuations, have helped the rebalancing process in recent years, structural factors have played a key role. The competitiveness and export performance of Spanish firms has improved significantly. s cost competitiveness has improved significantly vis-à-vis its main trading partners, with unit labour costs dropping 6.8% in (ECB, working days and seasonally adjusted) between Q and Q while increasing 5.5% in the euro area. Wage moderation and productivity gains have largely driven the competitiveness gains. Wage pressures could resume as the slack in the economy disappears. Therefore, boosting productivity will remain key to preserving its competitvenes gains. 120 Real Unit Labour Costs (Index 1999=100, 4Q Rolling average) 130 Share of World Exports (Index, 2000=100) Sovereign Ratings Group Italy Germany UK France Netherlands Sources: Spanish Treasury, Eurostat, IMF, Haver Analytics and DBRS. s exporting capacity has structurally improved. Spanish firms have increased their propensity to export, shown in the significant increase in the number of exporting firms by 49.1% (May 2017) relative to Moreover, Spanish exports have also increased their geographical and sectorial diversification over the last decade. Nevertheless, the export base suffers from the small size of most Spanish firms (in 2013, 95% of companies had fewer than ten employees), which are smaller than those in other advanced European countries. Although receding, s negative net international investment position remains high at 85.4% of GDP in Net marketable debt accounts for most of the NIIP at 74.5% of GDP in Given that the cost of servicing fixed-income liabilities is less sentitive to the economic cycle than equity liabilities, the predominance of net debt liabilities is riskier for external sustainability. The correction of the NIIP is expected to progress gradually, leaving the country exposed to shocks or shifts in investor sentiment. Political Environment Last election: 26 June 2016 Next election: No later than 26 July 2020 Party in power: Partido Popular (PP) Government Structure: Constitutional monarchy Prime Minister: Mariano Rajoy Since 1982, the Kingdom of s political system has been characterised by its bipartisanship, with the centre-right PP and centre-left Partido Socialista Obrero Español (PSOE) alternating power. This has resulted in stable government configurations in the past. However, the political picture has become more fragmented in Italy Germany U.K. France U.S. Netherlands

8 recent years. The mainstream political parties have lost significant political ground to Podemos (far-left) and Ciudadanos (centre). DBRS views the current PP minority government as less stable than during its previous term. During Rajoy s first term, a PP majority in Congress allowed the swift adoption of structural reforms and rebalancing fiscal measures. During the current term, the government relies on ad-hoc support in Congress to pass legislation. In particular, the government has relied on the support of Ciudadanos and some regional parties to approve the 2017 budget (with a significant delay, in June 2017) and later the spending ceiling for In light of the political situation, the government will most likely rollover the 2017 budget for 2018 and aim to pass the 2018 budget at the start of next year. Political tension and uncertainty escalated ahead of October 1 st, date of the government of Catalonia s planned to hold an independence vote. 1 Despite the fact that Spanish Constitutional Court had ruled the referendum illegal, and the presence of important procedural shortcomings, the regional government went ahead with the vote. Given the significant abstention, results were strongly in favour of Catalonia s independence, according to the regional government figures. While DBRS expects uncertainty over Catalonia to persist in the near to medium term, the central scenario is that of continuity for. This reflects legal and institutional safeguards that make a unilateral secession highly unlikely. Although not DBRS s baseline, there is a risk of an escalation of the standoff. If tensions were to escalate, political uncertainty could rapidly increase and investor sentiment could suffer. A protracted period of elevated uncertainty could negatively weigh on the economy and public finances. 8 Sovereign Ratings Group 1 For more details please see DBRS commentary entitled : Political Noise Rises as Catalonia s Planned Vote Nears is available at

9 : Selected Indicators For the year ended December 31 (EUR billions unless otherwise noted) Public Sector Debt General Government Gross Debt % GDP 69.5% 85.7% 95.5% 100.4% 99.4% 99.0% General Government Net Debt % GDP 51.6% 66.0% 74.0% 78.6% 79.9% 80.1% Central Government Gross Debt % GDP 56.0% 68.4% 76.9% 83.9% 84.9% 85.0% Domestic Debt General Government % GDP 35.0% 43.5% 38.7% 41.7% 44.2% 47.1% External Debt General Government % GDP 26.7% 32.0% 41.1% 48.3% 50.9% 49.4% Private Sector % GDP 133.6% 134.2% 118.7% 119.2% 117.6% 117.6% Gross External 1,716 1,728 1,639 1,739 1,819 1,868 % GDP 160.3% 166.2% 159.8% 167.6% 168.5% 167.0% Private Sector Debt Households % GDP 81.8% 80.6% 77.1% 72.7% 67.6% 64.1% Non-Financial Firms 1,416 1,310 1,231 1,168 1,147 1,134 %GDP 132.3% 126.0% 120.0% 112.5% 106.2% 101.4% Fiscal Balances (% GDP) Revenues 36.2% 37.6% 38.6% 38.9% 38.5% 37.7% Expenditures 45.8% 48.1% 45.6% 44.9% 43.6% 42.2% Interest Payments 2.5% 3.0% 3.5% 3.5% 3.1% 2.8% General Government Balance -9.6% -10.5% -7.0% -6.0% -5.1% -4.5% Interest Payments (% Revenues) 6.8% 7.9% 9.0% 8.9% 8.0% 7.4% Primary Balance -7.2% -7.5% -3.5% -2.5% -2.0% -1.7% Balance of Payments & Liquidity Current Account Balance % GDP -3.2% -0.2% 1.5% 1.1% 1.1% 1.9% Trade Balance (% GDP) -4.5% -3.1% -1.6% -2.4% -2.3% -1.7% Foreign Direct Investment (% GDP) 0.9% -2.0% -1.8% 0.6% 2.6% 1.5% International Investment Position % GDP -91.9% -89.9% -95.2% -97.8% -89.7% -83.9% External Assets External Liabilities Sources: Ministry of Economy and Competitiveness, Bank of, INE, AMECO, Eurostat, ECB, IGAE, INE, IMF, Haver Analytics and DBRS. Note: General government balances include financial sector support. 9 Sovereign Ratings Group

10 Ratings History Issuer Debt Rated Current , Kingdom of, Kingdom of, Kingdom of, Kingdom of Long-Term Foreign Currency Issuer Rating Long-Term Local Currency Issuer Rating Short-Term Foreign Currency Issuer Rating Short-Term Local Currency Issuer Rating A (low) A (low) A (low) A (low) A (low) A (low) A (low) A (low) A (low) A (low) R-1 (low) R-1 (low) R-1 (low) R-1 (low) R-1 (low) R-1 (low) R-1 (low) R-1 (low) R-1 (low) R-1 (low) Note: All figures are in euros unless otherwise noted. 10 Sovereign Ratings Group The DBRS group of companies consists of DBRS, Inc. (Delaware, U.S.)(NRSRO, DRO affiliate); DBRS Limited (Ontario, Canada)(DRO, NRSRO affiliate); DBRS Ratings Limited (England and Wales)(CRA, NRSRO affiliate, DRO affiliate); and DBRS Ratings México, Institución Calificadora de Valores S.A. de C.V. (Mexico)(CRA, NRSRO affiliate, DRO affiliate). Please note that DBRS Ratings Limited was registered as an NRSRO affiliate on July 14, For more information on regulatory registrations, recognitions and approvals, please see: , DBRS. All rights reserved. The information upon which DBRS ratings and reports are based is obtained by DBRS from sources DBRS believes to be reliable. DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance. The extent of any factual investigation or independent verification depends on facts and circumstances. DBRS ratings, reports and any other information provided by DBRS are provided as is and without representation or warranty of any kind. DBRS hereby disclaims any representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability, fitness for any particular purpose or non-infringement of any of such information. In no event shall DBRS or its directors, officers, employees, independent contractors, agents and representatives (collectively, DBRS Representatives) be liable (1) for any inaccuracy, delay, loss of data, interruption in service, error or omission or for any damages resulting therefrom, or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of ratings and rating reports or arising from any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS or any DBRS Representative, in connection with or related to obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information. Ratings and other opinions issued by DBRS are, and must be construed solely as, statements of opinion and not statements of fact as to credit worthiness or recommendations to purchase, sell or hold any securities. A report providing a DBRS rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. DBRS receives compensation for its rating activities from issuers, insurers, guarantors and/or underwriters of debt securities for assigning ratings and from subscribers to its website. DBRS is not responsible for the content or operation of third party websites accessed through hypertext or other computer links and DBRS shall have no liability to any person or entity for the use of such third party websites. This publication may not be reproduced, retransmitted or distributed in any form without the prior written consent of DBRS. ALL DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AT ADDITIONAL INFORMATION REGARDING DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGIES, ARE AVAILABLE ON