Italian Costs Rise After DBRS Rating Cut

Italian borrowing costs rose in early trade on Monday after DBRS cut Italy’s credit rating, warning that the country’s government has not taken a “systemic approach” to its banking crisis.

DBRS cut Italy’s sovereign credit rating to BBB (high) from A (low) after market close on Friday in a move that will mean Italy’s banks must pay more to borrow money from the European Central Bank when they use the country’s bonds as collateral.

Speaking to CNBC later Monday, Fergus McCormick, Co-Head of Sovereign Ratings and Chief Economist at DBRS said the move was a long term view and the discomfort began to grow in August last year.

“Unlike Ireland and unlike Spain, Italy has not taken a systemic approach to solving its problem,” McCormick told CNBC.

McCormick added that Italy’s banking sector was a victim of low economic growth as well as political uncertainty and therefore it was hard to see if the Italian banking system is at its lowest point.

via CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.