Services said it has affirmed its 'AAA' long-term and 'A-1+' short-term corporate
GmbH (DFS), due to strong links with, and expected extraordinary support from
the German state, its sole owner.
Government support is expected because DFS' activities are of strategic importance to Germany's economy, public safety, and defence capability, the ratings agency said.
The outlook is negative, reflecting "the uncertainties regarding DFS's future credit profile, rate-charging mechanism, and capital structure should the privatization take place over the medium term," said S&P's credit analyst, Ralf Etzelmueller.
The German government is still undecided if, when, and how privatization would occur and what DFS's future ownership structure will look like, S&P said.
With the next federal election expected in Germany in fall 2009, the ratings agency deems any privatization of DFS in the current legislative period as rather unlikely.
It, however, said it does not expect to revise the outlook back to stable in the medium term given the willingness of the German government to privatize the state-owned air traffic controller.
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