(The following statement was released by the rating agency)
LONDON/MILAN, March 21 (Fitch) Fitch Ratings has affirmed the
Italian Region of
Marche's Long-term foreign and local currency Issuer Default
Ratings (IDR) at
'BBB+' and its Short-term foreign currency IDR at 'F2'. The
affects EUR1.143bn of outstanding debt, including two
outstanding bonds of
EUR540m, as well as future borrowings. The Outlook is Negative.
KEY RATING DRIVERS
Debt: The region's stock of bonds and loans stood at EUR1.143bn
including EUR88m subsided by the national government. Fitch
expects it to remain
stable, accounting for about one third of the budget by 2015,
also in light of
low accumulated borrowing needs. In its base case scenario Fitch
servicing to remain low, and the debt service cover ratio to
eventually fall to
1x the operating balance in 2014, from close to 1.2x in 2013.
Fiscal performance: Marche continues to perform in line with
expectations of an operating balance of 4% of revenue for
2013-2015. The region
aims to cut back on spending should transfers from the national
curtailed. However, the scope for spending cuts becomes thinner
each year while
tax-raising potential is limited by already high tax rates at
level, including the personal income tax. Capital spending
halved to 7% of total
spending over 2008-2012, and may contract further to about 6% in
the region sizes investment according to available non-debt
Management: Marche has a track record of overall balanced
particularly, in health care. As a result, Fitch does not expect
health care to
be a source of pressure for the regional budget though it
absorbs 75% of the
revenue. Tax hikes in the past have contributed to maintaining
the sector in
balance and Marche's administration is confident that cost
control may avoid or
make affordable any tax hikes eventually needed to keep the
match. Investment planning and renovation of hospital premises
healthcare costs over the medium-term, which Fitch expects to
per year in 2013-2015.
Economy: Fitch expects Marche's GDP to have contracted by 2% in
2013 as low
demand hit manufacturing, such as house appliances, and as
spending weakened the real estate sector. Core exports of
furniture, clothes and
shoes, and a low 40% household debt-to-GDP ratio, amid an
hovering just above 60%, will be conducive to a modest economic
expects GDP to grow 0.5% in 2014 with a modest, if any, impact
generation. The agency continues to expect Marche's revenue to
be close to
EUR3.5bn per annum for 2013-2015.
Institutional framework: The 'BBB+' rating is also reflective of
cap as regions with an ordinary statute, such as Marche, lack
autonomy that can isolate their finances from those of the
and allow them to be rated higher than the sovereign.
Given the sovereign cap Marche's rating would be downgraded in
Italy's rating if the latter is downgraded. A change of Italy's
Stable would lead to a similar rating action on Marche's
Outlook, provided the
region continues to perform in line with Fitch's projections.
Conversely, a halving of the current balance compared with
of an average of EUR100m, or 2% of revenues, or deterioration in
fund balance deficit towards 10% of the budget from 1% in 2012
rating-negative. An unexpected prolonged recession with the
rising towards 15% could also trigger a rating downgrade.
+39 02 87 90 87 203
Fitch Italia - Societa Italiana per il Rating S.p.A.
Via Morigi, 6
+39 02 87 90 87 260
+34 93 323 8410
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530
Additional information is available at www.fitchratings.com.
Applicable criteria 'Tax-Supported Rating Criteria' dated 14
August 2012 and
'International Local and Regional Governments Rating Criteria '
dated 9 April
2013, are available at www.fitchratings.com.
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
International Local and Regional Governments Rating Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH