Halister News

(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