The ratings on Austria-based Landes-Hypothekenbank Tirol AG (Hypo Tyrol) are based on the deficiency guarantee (Ausfallsbürgschaft) of the bank's sole owner, the State of Tyrol (AA+/Stable/--). Although the deficiency guarantee is not a timely guarantee, Standard&Poor's believes that as long as the State is the majority owner and guarantor of all of the bank's obligations, it will have a strong economic incentive to support the bank in a timely fashion. This is particularly true given that: It would not be beneficial for the state to tarnish its own reputation as an issuer in the capital markets; The deficiency guarantee covers full payment of both principal and interest, including post-insolvency interest; and Hypo Tyrol continues to be important for
