March 2, 2020 / 9:22 AM / a month ago

Virus crisis to increase Italian companies' default risks -Cerved

MILAN, March 2 (Reuters) - Risks of default among Italian companies could double if the crisis provoked by the coronavirus outbreak lasts for the rest of the year, local credit rating agency Cerved said on Monday.

Cerved, which rates 25,000 Italian companies, said it had looked at two possible scenarios, assuming the crisis would be resolved in the first half of 2020 or last for the whole year, turning into a pandemic with long-lasting effects.

Cerved said a current average 4.9% default risk among Italian businesses rated by the group would rise to 6.8% in the first scenario and to 10.4% in the worst-case one.

The textile industry, transportation and tourism are the worst-hit sectors, Cerved said, estimating a reduction of the core profit margin for textile manufacturers to 4.7% from 7.0% at present it the best-case scenario and to 2.3% if the emergency were to last longer. (Reporting by Valentina Za, editing by Giulia Segreti)

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