December 04, 2023 (MLN): Fitch Ratings has affirmed the Bank of England's (BoE) Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at 'AA-' with a negative outlook.
The key rating drivers for this action include:
Rating Aligned with the UK
The 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.
The outlook on the UK's sovereign rating is Negative.
Fitch currently only rates the BoE's three-year maturity US dollar bonds. The rating does not apply to typical central-bank liabilities of the BoE, such as bank notes or commercial bank reserves that are monetary liabilities rather than rateable debt.
Support from UK Sovereign
The BoE's rating reflects the bank's 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 from its national strategic importance, as well as its ownership by the UK Treasury.
ESG – Governance
The UK has an ESG Relevance Score (RS) of '5[+]' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption.
These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model.
The UK has a high WBGI percentile ranking at 85.5 reflecting its long track record of stable and peaceful political transitions, well-established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption.
