EU, EIB Ratings at Risk in the Event of a ‘Brexit’, SocGen Says
(Bloomberg) -- The European Union may face risk of a one-notch downgrade should the U.K. vote to leave, while the European Investment Bank could see downgrade and spread widening risks, Societe Generale analyst Cristina Costa writes in a note.
- SocGen estimates impact of a U.K. exit would represent a loss of 2.43% for the EU overall annual budget, should the country opt for a status similar to Switzerland after its departure
- Switzerland isn’t a member of the European Economic Area, though it’s a member of the EFTA; commercial agreements are negotiated on an ad-hoc basis
- Any U.K. exit could weaken the profile of EIB, as share of high-rated countries would decrease to 59.6% from 66.1%
- “Brexit” could see widening of EIB-KfW spread by at least 5bps-10bps
- Consequences for the EBRD would be limited and mitigated by the fact that the bank has many non-EU board members
- “Brexit” unlikely to impact Council of Europe, Eurofima, EFSF and ESM, given lack of U.K. participation
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HALISTER1Source: BFW (Bloomberg First Word)
Tickers 654429Z LX (European Investment Bank)
2534Z GR (KFW)
People Cristina Costa (Societe Generale SA)
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