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Ratings Agencies Are Only A Year And A Half Late Once It Comes To The Italian Banks!

Reggie Middleton's picture




 

ZeroHedge reports: Bank Downgrades Jump The Atlantic: S&P Cuts Italian Intesa Sanpaolo, Mediobanca From A+ To A

Just so the Italian banks don't feel isolated and get more than their fair share of intraday limit down closes, here comes S&P, via Bloomberg:

    • S&P cuts Intesa Sanpaolo ratings to A from A+; outlook negative
    • S&P cuts Mediobanca ratings to A from A+; outlook negative

BoomBustBloggers were given the heads up on this as far back as February 9th, 2010 in our subscriber document: Italian Banking Macro-Fundamental Discussion Note

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As a matter of fact, all of the banks illustrated in that document were/are highlysuspect!As experpted fromy post yesterday which touvhed upon Italy as contagion...

Remember, I also asserted that Italy was nowhere near as strong a credit as the media and the sell side has made it out to be. As a quick recap:

Subscriber document (click here to subscribe) from March 2010 (exactly 1 1/2 years ago): [PDF] Italy public finances projection, as excerpted from page one...

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Did I have a point? Well, a full year and a half later, as per Moody's by way of ZeroHedge...

As usual, a corrupt and pathetic Moody's continues to boldly not go where everyone else has gone before. Luckily, S&P, which had the balls to cut the US, has just done so to Europe's next domino, by downgrading Italy from A+ to A, outlook negative. Then again, this was pretty much telegraphed 100% earlier today as noted in "Italy Expected To Cut Growth Forecasts Further." Anyway, those incompetents from Moody's are next.

Full report:

Italy Unsolicited Ratings Lowered To 'A/A-1' On Weaker Growth Prospects, Uncertain Policy Environment; Outlook Negative

Overview

    • Italy's net general government debt is the highest among 'A' rated sovereigns. We have revised our projections of Italy's net general government debt and now expect it to peak later and at a higher level than we previously anticipated.
    • In our view, Italy's economic growth prospects are weakening and we expect that Italy's fragile governing coalition and policy differences within parliament will continue to limit the government's ability to respond decisively to domestic and external macroeconomic challenges.
  • In our view, weaker economic growth performance will likely limit the effectiveness of Italy's revenue-led fiscal consolidation program.
    • We have revised our base-case medium-term projections of real GDP growth to an annual average of 0.7% between 2011 to 2014, compared with our previous projection of 1.3% (see "Credit FAQ: Why We Revised The Outlook On Italy To Negative," published May 23, 2011). As part of our ratings analysis, we have also prepared upside and downside macroeconomic scenarios that could drive our future rating actions on Italy.
  • We are lowering our long- and short-term unsolicited sovereign credit ratings on Italy to 'A/A-1' from 'A+/A-1+'.
    • The negative outlook reflects our view of additional downside risks to public finances related to the trajectory of Italy's real and nominal GDP growth, and implementation risks of the government's fiscal consolidation program.

We believe the reduced pace of Italy's economic activity to date will make the government's revised fiscal targets difficult to achieve. Furthermore, what we view as the Italian government's tentative policy response to recent market pressures suggests continuing future political uncertainty about the means of addressing Italy's economic challenges.

 

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