March 5, 2018 / 5:03 PM / 15 days ago

Italy election has "no immediate effect" on country's rating - S&P, DBRS

LONDON, March 5 (Reuters) - The uncertainty surrounding Italy’s election vote has no immediate impact on the country’s sovereign credit rating, ratings firms S&P Global and DBRS said on Monday.

Italy faces a prolonged period of political instability after voters delivered a hung parliament in Sunday’s election, spurning traditional parties and flocking to anti-establishment and far-right groups in record numbers.

It saw investors dump Italian government bonds on Monday and buy high-grade equivalents such as German Bunds instead, but the two ratings firms said for the time being there was no impact to their respective BBB (stable) and BBB (high) credit grades.

“Italy’s general election outcome has no immediate effect on the sovereign rating,” S&P said in a statement.

“Downward rating pressure could build... if budgetary consolidation faltered, especially if the incoming government abandoned the previous government’s commitment to sustained fiscal consolidation.”

Smaller rival DBRS said it believed that the “EU fiscal framework should mitigate a significant worsening in Italy’s fiscal position.”

“Growth appears more self-sustained and it is not projected to be affected in the short term by the political uncertainty.” (Reporting by Marc Jones, Editing by Alasdair Pal)

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