ROME: Standard & Poor’s said today it did not expect any immediate effect on Italy’s sovereign rating following the government’s decision to set up a €20 billion fund to help ailing banks, including Monte dei Paschi de Siena. The credit ratings agency currently has a ‘BBB-‘ rating for Italy, with a ‘stable’ outlook. The agency said that if the €20 billions were fully drawn, the country’s net general government debt would increase by 1.2% of gross domestic product to 131.6% of GDP at the end of 2017.
“The borrowings to fund the recapitalisations would crystallise some contingent liabilities on Italy’s balance sheet… this would reduce Italy’s total contingent liabilities because they would be transformed into government debt,” it said in a statement.