Dexia Municipal Agency decided to maintain a minimum regulatory over-collateralization ratio of 105%. The rating agencies may require a higher level of over-collateralization. This requirement depends on the methodology applied and on the new assets and liabilities on Dexia Municipal Agency’s balance sheet, and it may vary over time. Dexia Municipal Agency takes these particular requirements into account in the management of its activities, in order to make sure they are always respected.

 

 

Regulatory over-collateralization is less than nominal over-collateralization because it is calculated on the basis of the rules determined by the Autorité de contrôle prudentiel – ACP. These rules require different weighting levels according to the assets. The assets in Dexia Municipal Agency’s cover pool are generally weighted at 100%, except for certain units of internal securitization vehicles (issued by Dexia subsidiaries), rated in category single A, which are weighted at 80% for the calculation of the regulatory ratio. This particular weighting is the reason for most of the gap between regulatory over-collateralization and nominal over-collateralization.