Dbrs cut the rating of Italy. Funding risk for banks – The Republic

MILAN The credit rating agency canadian Dbrs cut its rating of Italian debt to BBB stable, in line with the other international agencies which had already taken away the judgment, “” State Italian. The judgment reflects the political uncertainties that make it more difficult for the government to the achievement of the announced reforms and the difficulties of the banking sector. The agency – with headquarters in Toronto (Canada) and with offices in New York, Chicago, and London – is not known as the big three, Moody’s, Standard&Poor’s and Fitch, but it certainly has weight for investors. The judgment weighs “a combination o f factors, one reads in the note, including the uncertainty with respect to the political skill to support the efforts for structural reforms, and the continued weakness of the banking system in a period of fragile growth”.

WHAT IS THE RATING – SCALE VALUES

The loss of the “A” for Italy makes it more difficult for Italian banks to deposit government bonds as collateral at central banks to obtain liquidity According to some accounts, fail to credit system Italian something like 30 billion euros of liquidity, and ammunition that the banks themselves would be able to use to support business. Before the canadian society, the relegation had already been confirmed by the three giants in the sector: Standard & Poor’s, Moody’s and Fitch. The first with a rating of BBB-, the second of Baa2, and the third of BBB+. Dbrs believes that, “following the referendum rejected the constitutional changes that could provide greater stability in government and the subsequent resignation of prime minister Renzi, the new interim government may have less space to pass any additional measures, thus limiti ng the upside of the economic outlook”. In addition, despite the recent plans of support of the banking sector, the level of npl (Non-performing loan, problem loans) remains “very high” to “impair the ability of the banking sector to act as a financial intermediary to support the economy. In this context, low growth has led to delays persisted in the reduction of the high debt, leaving the country more exposed to the shock.”

Throws water on the fire instead of the Bank of Italy. According to the Via Nazionale, the cut “would have a limited effect on the ability of Italian banks to have access to funding from the Ecb”, because the banks make a limited use of public debt securities as collateral in the transactions the Ecb.

Topics:

Dbrs

rating

standard&poor’s

moody’s

fitch

the Debt

banks

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