February 8, 2012 / 5:15 PM / 7 years ago

TEXT-Fitch cuts 40 Italian subnationals, 6 public sector entities

Feb 8 - Fitch Ratings has downgraded 40 Italian local and regional
governments and their debt, and six public sector entities (PSEs). The affected
entities had been placed on Rating Watch Negative (RWN) on 21 December 2011. The
regions of Sardinia and Piemonte and the city of Naples have been maintained on
RWN. The Long and Short-term ratings of all other issuers have been removed from
RWN and the Outlook on the Long-term ratings is Negative. Fitch expects to
complete the review of the issuers on RWN over the next few months.	
	
The rating actions largely reflect the downgrade of Italy's sovereign Long-term
Issuer Default Rating (IDR) to 'A-'/Negative from 'A+'/Negative on 27 January
(see 'Fitch Takes Rating Actions on Six Eurozone Sovereigns' at
www.fitchratings.com) and the application of the agency's "International Local
and Regional Governments Rating Criteria outside United States", dated 19 April
2011, according to which subnationals' ratings cannot usually be higher than
their sovereign. Subnationals that meet the conditions for a rating above the
sovereign, as outlined in "Rating Subnationals above the Sovereign in the Euro
Area" have also been downgraded as they have exhausted the maximum leeway for a
subnational rating above the sovereign of a maximum one rating category (three
notches).	
	
The Autonomous Region of Sardinia's Long-term rating has been downgraded by two
notches to 'A' from 'AA-' and remains on RWN pending a more thorough assessment
of the region's factors for a rating above the sovereign. The analysis will
consider, among others, the evolving intergovernmental arrangements towards a
funding system from national subsidies to tax sharing. As the region meets three
of the four factors (institutional strength, financial autonomy, economic
strength and fiscal antagonism) for a rating above the sovereign, Fitch will
review the extent to which Sardinia's below average economic wealth indicators
may lead to an unfavourable balance in expenditure and revenue. Even if the
assessment of the tax resiliency to economic trends and stress is favourable,
Sardinia's below national average economic strength does not suggest more than a
one-notch uplift above the Italian sovereign.	
	
The regions of Calabria and Sicily, the provinces of Brescia, Lecce, Pescara,
and Varese, and the cities of Carrara, Naples and Siena have been downgraded by
one further notch beyond the compression deriving from the application of the
"International Local and Regional Governments Rating Criteria outside United
States", subsequent to the sovereign downgrade. The 'BBB' rating category for
these issuers reflects Fitch's expectations of protracted weak debt and
debt-service coverage ratios over the medium term, due to a combination of high
debt levels and/or stress on revenue generation from the ongoing economic
recession. Fitch expects a GDP contraction of 1.7% nationally in 2012, near
stagnation in 2013 (GDP +0.2%), and risks of weak growth afterwards. In some
cases the rating action also considers the issuers' negative fund balance or,
specific local factors, such as diminishing subsidies from the local Bank
Foundation for the City of Siena.	
	
The Negative Outlooks mostly mirror that on Italy. For 'BBB' category issuers,
it also reflects the higher vulnerability of their budgets to an eventual
intensification of the ongoing economic and financial crisis.	
	
The resolution of the RWN of the region of Piemonte will focus on the possible
consequences of the deliberation of the executive government on 23 January 2012,
which mandated the financial manager to cancel former deliberations authorising
interest rate and amortising swap transactions on a notional amount of EUR1.8bn
of bonds issued in November 2006. If the internal deliberations are eventually
cancelled and the region's treasury bank's irrevocable commitment "mandato
irrevocabile di pagamento" to pay the swap counterparties (taken when the swap
transactions were entered into) is breached, Piemonte's ratings might be
downgraded, possibly by multiple notches. Consistent with the Debt and Default
section in the agency's "International Local and Regional Governments Rating
Criteria outside United States" the magnitude of the downgrade will ultimately
depend on whether the financial commitments are repealed on grounds of
commercial disputes or also because of legal impediments.	
	
The resolution of the RWN of the city of Naples will focus on the actions being
taken by the newly elected administration to counter liquidity pressures
stemming from the growth of uncollectible receivable amid declining national
subsidies and risks arising from the responsibility to collect the municipal
property tax implemented from 2012.	
	
Six companies and agencies owned by Italy's sovereign or subnational governments
have also been downgraded following the application of the agency's "Rating of
Public Sector Entities - Outside the United States" methodology according to
which dependent entities cannot be rated above the owner (sponsor) and
non-dependent entities cannot be rated above the sponsor, unless their
standalone rating is stronger than the owner. Sace's standalone rating has
consequently been downgraded to 'A-' from of 'A' to reflect the weaker
macro-economic background for the issuer's operations, and subsequent downward
pressures on its profitability, as well as the concentration risk stemming from
a large proportion of the fixed-income portfolio invested in government bonds
issued by the Republic of Italy.	
	
Under the top-down approach of the criteria "Rating of Public Sector Entities -
Outside the United States" ASAM and ATC's Long term ratings have been downgraded
to 'BBB+' and maintain a one-notch differential with their sponsors, the
Province of Milan and the Region of Piemonte, respectively. ATC's standalone
rating is also 'BBB+'. All things being equal, a downgrade of its sponsor would
not automatically lead to a downgrade of ATC's ratings.	
	
The rating actions are as follows:	
Autonomous Province of Bolzano	
Long-term foreign and local currency ratings downgraded to 'AA-' from 'AA+' with
Negative Outlook	
Short-term rating of 'F1+' affirmed	
Primary analyst: Danilo Quattromani	
Secondary analyst: Raffaele Carnevale	
	
Autonomous Region of Friuli Venezia Giulia	
Long-term foreign and local currency ratings downgraded to 'AA-' from 'AA' with
Negative Outlook	
Short-term rating of 'F1+' affirmed	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
City of Trieste	
Long-term foreign and local currency ratings downgraded to 'AA-' from 'AA' with
Negative Outlook	
Short-term rating of 'F1+' affirmed	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
Autonomous Province of Trento	
Long-term foreign and local currency ratings downgraded to 'AA-' from 'AA+',
with Negative Outlook	
Short-term rating of 'F1+' affirmed	
Primary analyst: Danilo Quattromani	
Secondary analyst: Raffaele Carnevale	
	
The Long-term local currency ratings of the following issues have been
downgraded to 'A+' from 'AA' as they are credit-linked to the Province of
Trento:	
University of Trento's EUR43.7m amortising fixed-rate notes due in 2015 (ISIN:
IT0003976971)	
Trentino Trasporti's EUR33.6m amortising fixed-rate notes due in 2014 (ISIN:
IT0003794127)	
Garda Trentino Fiere's EUR15m bullet fixed-rate notes due in 2016 (ISIN:
IT0004051436)	
Itea's EUR49.9m amortising fixed-rate notes due in 2015 (ISIN: IT0003794572)	
	
Autonomous Region of Valle d'Aosta	
Long-term foreign and local currency ratings downgraded to 'AA-' from 'AA+' with
Negative Outlook	
Short-term rating of 'F1+' affirmed	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
Autonomous Region of Sardinia	
Long-term foreign and local currency ratings downgraded to 'A' from 'AA-';
maintained on RWN	
Short-term rating to 'F1' from 'F1+'; maintained on RWN	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
Region of Lombardy	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Raffaele Carnevale	
Secondary analyst: Sergio Ciaramella	
	
Region of Veneto	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Raffaele Carnevale	
Secondary analyst: Alessandro Musto	
	
Region of Lazio	
Long-term foreign and local currency ratings of 'A-' affirmed, Outlook revised
to Negative	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Raffaele Carnevale	
Secondary analyst: Danilo Quattromani	
	
Region of Piemonte	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A';
maintained on RWN	
Short Term rating downgraded to 'F2' from 'F1'; maintained on RWN	
Primary analyst: Raffaele Carnevale	
Secondary analyst: Danilo Quattromani	
	
Agenzia Territoriale per la Casa della Provincia di Torino - ATC	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A-' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
Province of Bologna	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Sergio Ciaramella	
	
Province of Catania	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Sergio Ciaramella	
Secondary analyst: Raffaele Carnevale	
	
Province of Florence	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Sergio Ciaramella	
	
Province of Milan	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Raffaele Carnevale	
	
The Long-term foreign and local currency ratings of Azienda Sviluppo Mobilita ed
Ambiente SpA (ASAM) downgraded to 'BBB+' from 'A' with Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Raffaele Carnevale	
	
Province of Perugia	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
Province of Rome	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Raffaele Carnevale	
	
Province of Venice	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Raffaele Carnevale	
Secondary analyst: Sergio Ciaramella	
	
City of Brescia	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Danilo Quattromani	
	
City of Busto Arsizio	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Sergio Ciaramella	
	
City of Cagliari	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Danilo Quattromani	
	
City of Capannori	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Sergio Ciaramella	
	
City of Como	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Sergio Ciaramella	
Secondary analyst: Danilo Quattromani	
	
City of Fiumicino	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Sergio Ciaramella	
	
City of Milan	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Raffaele Carnevale	
Secondary analyst: Danilo Quattromani	
	
City of Monza	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
City of Pescara	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Sergio Ciaramella	
Secondary analyst: Danilo Quattromani	
	
City of Pisa	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Alessandro Musto	
	
City of Rome	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Raffaele Carnevale	
	
City of Turin	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
City of Valmontone	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Sergio Ciaramella	
	
City of Verona	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Sergio Ciaramella	
Secondary analyst: Danilo Quattromani	
	
Region of Calabria	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Raffaele Carnevale	
	
Region of Sicily	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
Province of Brescia	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Alessandro Musto	
	
Province of Lecce	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Sergio Ciaramella	
	
Province of Pescara	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Sergio Ciaramella	
	
Province of Varese	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danolo Quattromani	
Secondary analyst: Sergio Ciaramella	
	
City of Carrara	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Sergio Ciaramella	
	
City of Siena	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Sergio Ciaramella	
Secondary analyst: Raffaele Carnevale	
	
City of Naples	
Long-term foreign and local currency ratings downgraded to 'BBB+' from 'A-'
maintained on RWN	
Short term rating of 'F2' maintained on RWN	
Primary analyst: Danilo Quattromani	
Secondary analyst: Alessandro Musto	
	
Gestione Commissariale del Comune di Roma	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Primary analyst: Sergio Ciaramella	
Secondary analyst: Raffaele Carnevale	
	
Sace SpA	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Raffaele Carnevale	
Secondary analyst: Federico Faccio	
	
Poste Italiane SpA	
Long-term IDR and senior unsecured rating downgraded to 'A-' from 'A+' with
Negative Outlook	
Short-term IDR downgraded to 'F2' from 'F1'	
Primary analyst: Danilo Quattromani	
Secondary analyst: Francesca Fraulo	
	
Politecnico di Torino	
Long-term foreign and local currency ratings downgraded to 'A-' from 'A' with
Negative Outlook	
Short-term rating downgraded to 'F2' from 'F1'	
Primary analyst: Alessandro Musto	
Secondary analyst: Raffaele Carnevale	
	
Umbria's bonds	
Long term local currency rating on the Region of Umbria's EUR487.3m 4.86%
amortising notes due 2018 (ISIN: XS0156017955) downgraded to 'A-' from 'A+' as
they are credit-linked to the Italian sovereign	
	
Contacts:	
Raffaele Carnevale	
Senior Director	
+39 02 87 90 87 203	
Fitch Italia SpA	
1, Vicolo Santa Maria alla Porta	
20123 Milan	
	
Danilo Quattromani	
Director	
+39 02 87 90 87 275	
Fitch Italia SpA	
1, Vicolo Santa Maria alla Porta	
20123 Milan	
	
Sergio Ciaramella	
Director	
+39 02 87 90 87 216	
Fitch Italia SpA	
1, Vicolo Santa Maria alla Porta	
20123 Milan	
	
Federico Faccio	
Senior Director	
+ 44 20 3530 1394	
Fitch Ratings Limited	
30 North Colonnade	
London E14 5GN	
	
Francesca Fraulo	
Director	
+39 02 87 90 87 237	
Fitch Italia SpA	
1, Vicolo Santa Maria alla Porta	
20123 Milan	
	
Alessandro Musto	
Associate Director	
+39 02 87 90 87 201	
Fitch Italia SpA	
1, Vicolo Santa Maria alla Porta	
20123 Milan	
	
Committee Chairperson	
Guido Bach	
Senior Director	
+49 69 76 80 76 111	
Additional information is available on www.fitchratings.com. The ratings of the
cities of Carrera, Siena and Brescia and the Region of Lombardy were unsolicited
and have been provided by Fitch as a service to investors. All other ratings
were solicited by, or on behalf of, the issuers, and therefore, Fitch has been
compensated for the provision of the ratings.	
	
The Region of Lombardy and the cities of Siena and Carrara did not participate
in the rating process, or provide additional information, beyond their available
public disclosure.	
	
Applicable criteria, "Tax-Supported Rating Criteria", dated 15 August 2011, and
"International Local and Regional Governments Rating Criteria outside United
States", dated 19 April 2011, "Rating Subnationals above the Sovereign in the
Euro Area", dated 1 June 2011, "Revenue Supported Rating Criteria" dated 20 June
2011, "Rating of Public Sector Entities - Outside the United States" dated 21
April 2011, "Rating Guidelines for Colleges and Universities Outside US" dated 7
July 2011 are available on www.fitchratings.com.	
	
Applicable Criteria and Related Research:	
Tax-Supported Rating Criteria	
International Local and Regional Governments Rating Criteria - Outside the
United States	
Rating Subnationals Above the Sovereign in the Euro Area	
Revenue-Supported Rating Criteria	
Ratings of Public Sector Rating Entities - Outside the United States	
Rating Guidelines for Colleges and Universities Outside the US
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