“A possible negative outcome of the revision of the rating assigned to the Italian Republic by the agency Dbrs would have a limited effect on the ability of Italian banks to access Eurosystem refinancing”. Already a few months ago, in the most recent financial stability Report the Bank of Italy had put the hands forward, trying to reassure the markets about the possible impact of the loss of the last “A” from the part of our public debt.
Italy lost the last “A”: Dbrs cuts rating to BBB
according To many analysts, the decision taken yesterday evening by the agency of canada, anything but surprising when, last August, the creditworthiness of our Country was put under the lens with negative implications, not indeed, it would be particularly penalizing for our credit institutions, at least for the most of them. Standard & Poor’s no more than two days ago he had reassuring words, remembering that the incision made by the “competitor” would then likely followed by their part no derating to the detriment of the Italian banks.
To understand, however, as the pronouncement of Dbrs risks for the moment to become a non-event, you need to take a step back to remember what are its consequences actual. As is well known, the canadian was the last of the four taken into consideration by the Ecb (the other are, in fact, the S&P, Moody’s and Fitch) to ensure at least an “a” rating is the Italian, the judgment must order that the Treasury may be classified as level 2 when they are used as collateral in the refinancing operations of the Eurosystem.
The next auction, Italy will slip to level 3, and that means the people who will bring the BTp, and the like as a guarantee to get the money in the loan you will apply a deduction (haircut) greater than: for example, not more than 0,5% but 6% for a security with a remaining maturity of less than one year as the BoT, or 13% instead of 5% on a bond with a duration of over 10 years. The difference would be in theory significant, but according to the Bank of Italy and the analysts is not so relevant to make our financial system more problems than already has.
that’s why the decision of the Dbrs rating is so important
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the crux of The matter is in understand what is the actual use of government securities by Italian banks as a guarantee at the Eurotower. Certain data which, unfortunately, you have only at the aggregate level in europe, where the share linked bonds, sovereign (including the Bund from the maximum rating) is about 17.7% of the total amount of the collateral deposited. As, however, is at The Sole 24 Ore, the major banks of our Country would be a very limited use, in some cases, even irrelevant, of BTp as a pledge for the operations of the refinancing, preferring instead to assets such as securitisations and covered bonds.
A direct confirmation also comes from a spokesman for the Ecb, commenting on yesterday the downgrade, Dbrs noted that “some of the counterparties that have mobilized such securities may now have to use collateral additional to maintain current levels of over-collateralisation”. The technical language hides in this case, two more aspects to consider in the story: the first is that the impact of 10 billion euros many analysts have estimated damages to the Italian banking system is not about additional money that must come out from the speakers, but the quantity of securities that must be pledged as collateral to maintain the current level of funding.
the Reforms, which the markets are asking the sprint reverse
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The second question concerns, precisely, the same amount of activity deposited to be utililizzate as collateral, that is in fact significantly higher than what is necessary to borrow the money actually required. At the end of march 2016, the Bank of Italy, speaking precisely of an excess (over-collateralisation in fact) of 40%, the bearing is probably reduced since the action of the Italian institutions to the financing of the Eurosystem has in the meantime increased from 151 billion to 202 billion at the end of December, but that should still put away from surprises.
that’s why the decision of the Dbrs rating is so important
because, as is always emphasized in the financial stability report, outside of the so-called collateral pool, the Italian banks had at the end of September marketable securities available for 241 billion, equal to 164% of the exposure back then with the Eurosystem, and to 95% of that on the repo markets. In view of the figures, you can find additional collateral should not represent an insurmountable problem at the level of the system, even if it is not possible to exclude cases of difficulty, especially between the banks of lesser stature. With good peace of Dbrs, and liquidity is not currently a significant risk for the Italian banks, at least.
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