Fitch gives illimity B+, notes B

Fitch Ratings said it gave illimity Bank SpA’s long-term issuer default rating of B+ with a stable outlook. Fitch also assigned an expected rating of B to illimity’s planned senior preferred debt issuance.

The ratings are underpinned by its illimity’s capitalization. “illimity’s common equity tier 1 (CET1) ratio of 19.2% at end-September 2020 had ample buffers over regulatory requirements,” Fitch said in a press release. Concerning the debt rating, Fitch said, “illimity’s planned senior preferred debt issuance is rated one notch below the long-term IDR based on an estimated recovery rating of RR5. This reflects Fitch’s view that recovery prospects for the bank’s senior preferred creditors would be below average given full depositor preference in Italy and the bank’s funding structure, which we view as effectively reducing recovery prospects for senior preferred creditors in a liquidation (our central assumption should illimity be in distress),” the agency said in a press release.

The outlook reflects Fitch’s view illimity’s credit profile will be resilient to the coronavirus’ disruption in Italy, including in a moderately adverse scenario to Fitch’s current baseline, the agency said.

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