December 28, 2016 / 10:19 AM / 3 years ago

S&P says Italy rating unaffected by state support to banks

MILAN, Dec 28 (Reuters) - Standard & Poor’s said on Wednesday it did not expect any immediate effect on Italy’s sovereign rating following the government’s decision to set up a 20 billion euro ($21 billion) fund to help ailing banks, including Monte dei Paschi.

The credit ratings agency currently has a ‘BBB-‘ rating for Italy, with a ‘stable’ outlook.

The agency said that if the 20 billions euros were fully drawn, the country’s net general government debt would increase by 1.2 percent of gross domestic product to 131.6 percent of GDP at the end of 2017.

“The borrowings to fund the recapitalisations would crystallize 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. ($1 = 0.9581 euros) (Reporting by Giulia Segreti; editing by Agnieszka Flak)

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