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Related Issuers
Abruzzo, Region of
Basilicata, Region of
Campania, Region of
Cassa del Trentino S.p.A.
Civitavecchia, City of
Related Research
Credit Opinion: Region of Lombardy (Italy): Update to credit analysis
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Credit Opinion: Region of Abruzzo (Italy): Update to credit analysis
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Rating Action:
Moody's Public Sector Europe places 20 Italian sub-sovereigns on review for downgrade
29 May 2018
London, 29 May 2018 -- Moody's Public Sector Europe has today placed the ratings of 18 Italian regional and local governments and two Government Related Issuers under review for downgrade. At the same time Moody's has affirmed the Ba2 ratings of the Region of Lazio with stable outlook.
The decision to place the ratings on review for a downgrade was prompted by the corresponding action on Italy's government bond rating
Moody's places Italy's Baa2 rating on review for downgrade, on May 25. Please also refer to the comment published by the sovereign team
Moody's: Italy's political crisis escalates, autumn elections likely, on May 29.
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RATINGS RATIONALE
RATIONALE FOR PLACING 20 SUBSOVEREIGNS UNDER REVIEW FOR DOWNGRADE
Regional and Local Governments. Sovereign credit conditions drive the ratings for the sector. Slow progress with national economic and fiscal reforms pose risks for RLGs and outweigh recent successful budgetary consolidation efforts.
Italian regional and local governments (RLGs) are enduringly linked with the central government via close institutional, economic and financial links. These links have strengthened in the course of the last few years due to several changes in the institutional framework, leading to higher supervision and greater control mechanisms exerted by the sovereign.
Moody's notes that regions strongly rely on the Italian sovereign for the funding of the healthcare sector, their main responsibility which absorbs a very high portion of their budgets. The dependence of Italian RLGs on sovereign transfers has been reinforced by stricter limits on their financial autonomy. As a result, a weakening in Italy's fiscal strength may lead to fiscal pressure for RLGs over the medium term.
Furthermore all RLGs are largely dependent on the sovereign for their borrowing needs for capital expenditures. As such their cost of funding is largely reliant on sovereign credit conditions. The Italian government already accounts for a large portion of regional and local governments' existing debt and has been in practice the sole lending provider in the last few years.
Government-Related Issuers. The decision to place the Baa2 rating for MM S.p.A. and the A3 rating for Cassa del Trentino S.p.A under review for downgrade, follows the corresponding decision on their respective owners (City of Milan Baa2/RUR- and Autonomous Province of Trento A3/RUR-). From a credit-risk perspective, there is no meaningful distinction between these two entities and their respective owners because of the intrinsic operational ties between the two.
The conclusion of the review on the sovereign bond rating will prompt a conclusion of the review for the affected sub-sovereigns.
RATIONALE FOR AFFIRMING THE RATING OF THE REGION OF LAZIO WITH STABLE OUTLOOK
The Ba2 ratings of the Region of Lazio have been affirmed. The current positioning of the rating and the significant progress of the region toward budgetary consolidation and debt stabilization can accommodate further pressure potentially coming from the sovereign.
WHAT COULD CHANGE THE RATING DOWN IN THE CONTEXT OF THIS REVIEW
Moody's would consider downgrading some or all the ratings of the affected sub-sovereigns in case of a sovereign rating downgrade, after assessing the implications of the sovereign credit conditions and the pressures exerted on their finances.
WHAT COULD LEAD TO CONFIRMATION OF THE RATING AT THE CURRENT LEVEL
Moody's will confirm all the ratings of the affected sub-sovereigns in case of sovereign rating confirmation.
The sovereign action required the publication of these credit rating actions on a date that deviates from the previously scheduled release date in the sovereign release calendar, published on
www.moodys.com.
The specific economic indicators, as required by EU regulation, are not available. The following national economic indicators are relevant to the sovereign rating, which was used as an input to this credit rating action.
Sovereign Issuer: Italy, Government of
GDP per capita (PPP basis, US$): 36,877 (2016 Actual) (also known as Per Capita Income)
Real GDP growth (% change): 0.9% (2016 Actual) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 0.5% (2016 Actual)
Gen. Gov. Financial Balance/GDP: -2.5% (2016 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: 2.6% (2016 Actual) (also known as External Balance)
External debt/GDP: [not available]
Level of economic development: High level of economic resilience
Default history: No default events (on bonds or loans) have been recorded since 1983.
On 25 May 2018, a rating committee was called to discuss the rating of the Civitavecchia, City of; Lazio, Region of; Milan, City of; Sicily, Autonomous Region of; Venice, City of; Abruzzo, Region of; Basilicata, Region of; Campania, Region of; Cassa del Trentino S.p.A.; Liguria, Region of; Lombardy, Region of; MM S.p.A.; Molise, Region of; Piedmont, Region of; Puglia, Region of; Sardinia, Autonomous Region of; Trento, Autonomous Province of; Umbria, Region of; Valle d'Aosta, Autonomous Region of; Veneto, Region of; Bolzano, Autonomous Province of. The main points raised during the discussion were: The systemic risk in which the issuer operates has materially increased.
The principal methodology used in rating Abruzzo, Region of, Basilicata, Region of, Bolzano, Autonomous Province of, Campania, Region of, Civitavecchia, City of, Lazio, Region of, Liguria, Region of, Lombardy, Region of, Milan, City of, Molise, Region of, Piedmont, Region of, Puglia, Region of, Sardinia, Autonomous Region of, Sicily, Autonomous Region of, Trento, Autonomous Province of, Umbria, Region of, Valle d'Aosta, Autonomous Region of, Veneto, Region of, and Venice, City of was Regional and Local Governments published in January 2018. The principal methodology used in rating Cassa del Trentino S.p.A., and MM S.p.A. was Government-Related Issuers published in August 2017. Please see the Rating Methodologies page on
www.moodys.com for a copy of this methodology.
The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.
REGULATORY DISCLOSURES
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Log In - Moody's for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:
Oggi ho cominciato ad acquistare. Credo che qualche cippetto, con lo spread a 300, ci possa stare. Certo, possiamo pure arrivare a 500 se la situazione di incertezza si prolungasse, ma è anche vero che sostegni della BCE, per non far precipitare la situazione, potrebbero arrivare. Prendo intanto merce a sconto, poi per i saldi di fine anno vedremo 
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