DBRS Downgrades Italy, Stripping It Of Its Last “A Rating” And Raising ECB Collateral Haircuts

Jon Alternative Media, Blogosphere, Economy, Fiscal Policies

Update: sure enough, the Italian reaction didn’t take long and as Bloomberg cited an Italian Treasury official, the decision won’t impact the interest in Italian public debt. The “DBRS decision to downgrade Italy rating to BBB High from A Low could have impact on short-term debt, but that will be gauged only in coming months” and that the “rating change will not weigh significantly on cost of interests on Italy’s public debt.”
* * *
When previewing the key events of the week, we noted that today Canadian DBRS rating agency is scheduled to review Italy’s credit rating after putting its credit worthiness on negative watch on 5 August. On 5 December, DBRS issued a press release declaring that they would wait for the impact of the Italian referendum result on the continuation of the reform push before making the final decision. In case of a downgrade, the haircut for a 5y BTP used as collateral for ECB operations, as an example, would rise from 2% to 10%.
Moments ago DBRS did just that when it downgraded italy from A (low) to BBB (high), stripping the sovereign of its final A credit rating.

This post was published at Zero Hedge on Jan 13, 2017.