Dexia (0,38 EUR, 6,52%) S.A. and its subsidiary Dexia Crédit Local have obtained a temporary support agreement to cover its financial contracts and securities. The guarantee is joint but not several, and the allocation between the States (respectively 60.5%, 36.5% and 3% for Belgium, France and Luxembourg) remains the same. The temporary agreement has following features: - Initial maturity set at 31 May 2012; - A ceiling of € 45bn; - The guarantee covers short and medium-term financial contracts and securities having a maturity of three years or less; - Dexia will provide the three states with collateral for some of the guaranteed obligations issued under the benefit of the temporary agreement; - The remuneration will involve an upfront commitment fee of € 225m in addition to monthly fees calculated on the actual outstanding amount of guaranteed debt. Our View: The support agreement provides Dexia with a temporary releave but given its financing needs it means that they are still tapping a considerable amount with the ECB. The guarantee remuneration also points at a potential negative carry. Conclusion: We maintain our Reduce rating and € 0.10 target.