Moody’s downgraded the ratings of UniCredit, Intesa Sanpaolo, Enel and other Italian banks and companies, following the revision of Italy rating, three steps down, this week.
UniCredit debt rating and long-term deposits was downgraded by two notches, from “AA3” to “A2”, but short-term rating was unchanged at “Prime-1”, it said in a statement of the financial evaluation agency.
Moody’s has revised down a notch the rating for financial strength to “C-“. The outlook for long-term debt and deposits is negative.
The measure has been taken after the evaluation for a possible downgrade, initiated in May, and the expectations that the bank be forced to improve its relatively low profitability of the main operations in Italy in a difficult operating environment.
According to the agency, profitability and asset quality will remain some time at an appropriate level of “C-” of financial soundness.
Pressures on profits and asset quality will be exacerbated by government austerity measures in Italy and other countries.
Moody’s downgraded the debt rating of Intesa Sanpaolo and term deposits by two notches, from “AA3” to “A2” with negative outlook.
The rating “Prime-1” of the debt and short term deposits was not affected by the measure. The rating agency also changed the prospect of the “C +” rating for financial strength of Intesa Sanpaolo from stable to negative.
Bank ratings were under surveillance since June
The decision to change the financial strength rating reflects the perspective of direct exposure to Italian sovereign bonds of Intesa and focus on domestic operations, where the group obtained 77% of its revenues.
Moody’s downgraded the debt rating for energy group Enel for the debt uninsured with payment priority, from “A2” to “A3” with negative outlook, following the conclusion of the evaluation that began in June.
The Agency explained that, because of the worsening financial situation of Italy, the likeliness of Enel to receive support from the Italian government in case of need decreased significantly. For this reason, Moody’s ratings consider the financial situation Enel only in their own group.
The negative outlook of the ratings reflects increased uncertainty and tensions related to macroeconomic and sovereign debt in Italy and Spain, where Enel has its subsidiary company Endesa.
Moody’s confirmed the ratings of Assicurazioni Generali, the “AA3” for financial strength, “A1” for unsecured debt with payment priority and “A2” to subordinated debt, but the perspective was revised from stable to negative.
Keeping ratings at the same level reflects the view that diversification and flexibility of the company’s products protects it in a certain way to debt-related pressures of Italy.
Moody’s lowered the credit rating of Italy Tuesday with three stages, to “A2” with negative outlook, warning that it noted a significant increase in risk of financing for euro area countries with high levels of debt.