Scope Ratings reviews its ratings either yearly, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remains proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the Kingdom of the Netherlands (AAA/Stable; S-1+/Stable) on 13 August 2020. This monitoring note does not constitute a rating action nor indicates the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com

Key rating factors

The Netherlands’ AAA/Stable ratings is supported by its wealthy, diversified and internationally competitive economy, its favourable public debt profile and a resilient banking sector. At the same time, labour market duality, strong dependence on external developments and high mortgage debt of households remain structural weaknesses. The Netherlands’ short-term risk profile benefits from its strong external position, prudent fiscal policy and solid growth potential. The large fiscal response to the crisis is necessary to stabilise the Dutch economy but is unlikely to have a meaningful impact on structural fiscal policies, with the debt ratio remaining low compared to peers despite the stimulus programme. The Stable Outlook reflects Scope’s view that the risks the Netherlands face remain manageable given the economy’s inherent credit strengths, despite the cyclical slowdown. The ratings/outlooks could be downgraded if: i) the Netherlands experiences a sharp structural decline in GDP and/or ii) the country is hit by a large global trade shock and/or iii) fiscal consolidation were structurally reversed leading to a deterioration in the fiscal balances and increasing debt levels.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Public Finance Sovereign Ratings, 21 April 2020) is available on https://www.scoperatings.com/#!methodology/list.

This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.

Lead analyst: Bernhard Bartels, Director.

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