DBRS lowers Italy to BBB (high)

DBRS said it downgraded the Republic of Italy’s long-term local and foreign currency issuer ratings to BBB (high) with a stable trend from A (low).

The short-term local and foreign currency issuer ratings were affirmed at R-1 (low) with a stable trend.

This concludes the review with negative implications for all ratings.

DBRS said the action reflects a combination of factors including uncertainty over the political ability to sustain the structural reform effort and the continuing weakness in the banking system, amid a period of fragile growth.

The agency said it considers that, following the referendum rejecting constitutional changes that could have provided more government stability and the subsequent resignation of Prime Minister Renzi, the new interim government may have less room to pass additional measures, limiting the upside for economic prospects.

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