What will be the financial consequences of the NO victory in the Italian constitutional referendum? Here is a summary of the reports released today by Standard and Poor's, Goldman Sachs and Credit Swiss.
S&P: NO IMPACT ON ITALY'S RATING
Standard and Poor's announces that the result of the Italian constitutional referendum "for now will have no impact on Italy's rating". The rating agency maintains that the constitutional reform "would have had beneficial effects" from the point of view of political stability, but also underlines that the victory of the NO "has no immediate implications for the country's economic policies". Indeed, S&P underlines that the bicameral system "has not prevented Prime Minister Matteo Renzi from launching numerous structural reforms despite a narrow parliamentary majority and tough opposition, even within the government coalition".
GOLDMAN SACHS: LOW IMPACT ON BTPs, BUT WATCH OUT FOR BANKS
“According to our baseline scenario, a government will arrive in Italy supported broadly by the same current majority, which will remain in office until the end of the legislature, in 2018 – says Francesco Garzarelli, an analyst at Goldman Sachs – The chances that we go to snap elections have risen from one in five to one in four. We believe that the impact on BTPs will be contained (the spread could reach 190 basis points). We believe that the result of the vote reduces the chances that distressed Italian banks will be able to find a market solution to their problems. At the same time, the possibilities of an intervention piloted by the Government are increasing".
CREDIT SWISS: LIMITED RISK OF FINANCIAL CONTAGION
Also according to Credit Swiss analysts, the victory of the NO "is negative for the capital of Italian banks, but the risks of contagion should be limited", above all due to the reduced exposure of European banks to Italy. Rather, the more serious risks are two others: “1) the danger of a political contagion that would strengthen the anti-establishment forces elsewhere (in 2017 there are the French presidential elections); 2) if the recapitalization efforts of Italian banks fail, the prospect of a bail-in would open up”.
