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The Dbrs confirmed the BBB rating for Italy, a stable trend – Economy



Italian debt fell again for the second month in a row, against a decline in liquidity in the Treasury. But inflation is at a three-year low and its spread remains near a three-month high, even if it falls back from yesterday's turmoil: a sign that nearing the end of the year and signs of political instability keep investors on their way. The Dbrs, confirming the (high) BBB rating for Italy with a stable trend, noted that "political uncertainty remains a concern and burdensome ratings". According to the rating agency, "it is unlikely that the current government will serve the entire mandate until 2023, but the republic's presidential election in 2022 and the strength of the League in the polls can represent two important disincentives" for the ruling party, the agency added, noting the progress made by Italian banks despite a stagnant economy. "Extremely high public debt makes Italy vulnerable to shocks" determine the institution, "positively" evaluates the government's commitment to continue consolidating accounts and reducing tax wages that, even if simple, can represent the first step towards broader tax reform. To declare a reduction in public debt to 2,439.2 billion euros in September is Bankitalia. That was 23.5 billion lower than the previous month when it had dropped several billion.

The figure caused by the reduction in Treasury balances, Treasury liquid assets, by 43.7 billion, and therefore greater accounting effects than those related to budget turns: requirements, again in September, were 22.6 billion and fixed income in line with September 2018 at € 28 billion (€ 305.2 billion in the first nine months of this year). But it is still the datum that ended the historic historical ring debt debt – almost uninterrupted – from late 2018 to an all-time high of July, to 2,466 billion euros. That amount, in the context of the Italian economy with almost flat growth (0.1% in the third quarter) and with previous executives targeted by the market for anti-euro positions in the League, has contributed to blowing the spread of fire. . Today the differential moves at 160 and only at the end stops at 156 points, after touching 168 yesterday: far less than the peak of more than 300 during the yellow-green reign, but still at the maximum seen during the reign 'Conte bus' the government.

On the market there is no shortage of reasons: with approaching the end of the year, many investors have decided to secure the profits generated thanks to the running of BTP – driven by the latest Draghi package and the new government. a little more European than before – from the last months. And a good reason to get out of position in BTP is offered by signs of political instability related to regional elections or by divisions in the ArcelorMittal case: the hypothesis of investors who fear early elections, given the uncertainty about their European Italian position in the League, which -who is given the power of the electoral winner by the poll. Italy remains a great opportunity given the good returns in the zero level scenario in the world. But it was also specifically observed, given precisely the high debt, bloodless growth and, at the very least, the inflation rate stopped in October of only 0.2% per year. Very low, it is useless to think of reducing the debt / GDP ratio by 'diluting it' with greater nominal growth.

Therefore, all eyes, also on the ranking of rating agencies. The ranking confirmation by Dbrs, the least known major rating agency, does not seem destined to change the ideas of investors, who currently trust the cautious and expansive Minister of Economy Roberto Gualtieri's maneuver. But an economy without momentum, very low inflation and global risks – from China to the hypothesis of increasing tasks – shows that nothing is taken for granted in 2020. And the trend of its spread, again rising from October lows, is a signal that ECB Christine Lagarde could not go further than what Draghi had done. From here, the ball passes to the government. And Berlin, avoiding the recession, has announced that it will not launch a budget stimulus that is able to act as a 'game changer'.


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