‘Yes’ Vote in Italy Referendum Would Be Good News, DBRS Says
(Bloomberg) -- A “yes” vote at the Constitutional referendum would be a “game changer” for Italy as it would make it easier to pass the legislation through Congress and reduce the political party system’s fragmentation, according to Fergus McCormick, DBRS co-head of global sovereign ratings.
- One of Italy’s main problems has been its inability to pass reform legislation quickly, McCormick says in interview in London
- Referendum outcome remains unclear given high number of undecided voters; the economy is decelerating and some voters may use the vote to voice discontent
- If referendum passes, it would be “very, very good news” as it has the potential to turn around sentiment and investor confidence
- A “no” vote would lead to political instability and wouldn’t play in favor of growth, which is already low
- Italy has a high number of NPLs, which compounds the problem of low growth
- In the event of a “no” vote, DBRS wouldn’t take any “knee jerk” reaction; any Italy collapse unlikely as economy is still resilient
- NOTE: Fitch sees risks to Italy rating from referendum while Moody’s says fewer reforms would put downward pressure on rating; see referendum roundup
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
Tickers 2103Z IM (Republic of Italy)
People Fergus McCormick (DBRS Inc)
Topics Italy Constitution Change
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