The rating agency canadian Dbrs has cut Italy’s sovereign rating to BBB. The Peninsula has lost the last judgment level To the left so far, as the other big (Standard&Poor’s, Moody’s and Fitch) have already reduced the assessment of the creditworthiness of Italian to a value lower than that which indicates a medium-high quality. The decision will have consequences on the cost that the banks Italian support when they ask for liquidity to Ecb: Frankfurt am main, in fact, in establishing the amount of government securities that instit utions must provide as a guarantee (collateral), takes into consideration the best judgment among those of the major rating agencies.
The cutting of the evaluation, or downgrade will therefore be a burden for institutions. According to the agency Reuters, assuming that average increase of around 8% (consistent with the average residual maturity of the Italian public debt) and considering that the exposure of Italian banks to loans from the Ecb according to the latest data provided by the bank of Italy is about 175 billion, the result will be a need for additional collateral of up to $ 14 billion. In spite of this via the National has recently argued that the possible downgrade would have had a "limited effect" on the ability of Italian banks to access the refinancing at the Ecb, because the whole of the assets deposited and ready to be used in refinancing has recently been fuelled mainly by bonds and is further augmented the reserves of securities potentially negotiable.
As to the reasons for the decision, the cut "reflects a combination of factors, including theuncertainty the political capacity to sustain the effort reform and persistent the weakness of the banking system, in a period of growth fragile", it reads in the report of the agency. After the rejection of the constitutional reforms in the referendum, "the new interim government may have less space in which to approve further measures, limiting the prospects for the rise of the economy". In addition, despite the recent plans of support of the banking sector, the level of impaired 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 thehigh debt, leaving the country more exposed to the shock. Also remains, according to Dbrs, the risk of early elections in the first half of 2017, especially after the pronouncement of the council on the new election law expected for the 24th of January.
all in a context of economic growth, "flat and, in general, lower than the average for the euro area in the last decade". The potential for growth remains weak and "the need to improve performance is a fundamental challenge that has an impact on the rating of the Country", where both the low growth is the competitive insufficient are "probably the result of the low productivity of labour and capital, low rates of employment and low careers in education and search and development".
