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S&P says no rating change from Italy election

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(Globalpost/GlobalPost)

Ratings firm Standard & Poor's said Tuesday that results from Italy's election Sunday have had no impact as yet on the country's sovereign debt ratings.

"The Italian general election results have no immediate implications for Italy sovereign ratings," currently at BBB+ with a negative outlook for the country's long-term debt, S&P said.

Noting that the results pointed to a center-left majority in the lower house, but no clear majority in the Senate, the company projected that negotiations to form a new government would likely last about a month.

"We believe the policy choices of the next government, once it is mandated by Italian President Giorgio Napolitano, will be a key factor for Italy's sovereign creditworthiness," S&P said.

"Our current base-case expectation is that regardless of the government's composition, the fiscal consolidation will not deviate from the current path, given Italy's high stock of public-sector debt, estimated at 127 percent of GDP as of year-end 2012."

Economic growth, more than fiscal performance, constrains the sovereign creditworthiness of Europe's third largest economy, it said.

"We believe that the risk remains that the incoming government might not be seen as having a sufficiently strong mandate to further implement important structural reforms to improve Italy's economic growth prospects, with the economy remaining weak for a protracted period."

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http://www.globalpost.com/dispatch/news/afp/130226/sp-says-no-rating-change-italy-election