July 8, 2020 / 10:09 AM / a month ago

Barclays says Italy's debt burden sustainable, likely to remain high

LONDON (Reuters) - Although Italy’s debt burden is rising sharply in the face of the COVID-19 shock, its debt trajectory is likely to stabilise at high levels rather than end up on “unsustainable exponential path,” Barclays said in a new report on Wednesday.

“The key contributor is the structurally low core interest rates and the ECB’s commitment to putting a cap on Italian spreads,” Barclays said, referring to the European Central Bank’s massive asset purchase scheme.

In a major new report on debt in developed markets, Barclays estimated the euro area debt-to-GDP was likely to increase to around 100% in 2020 from around 85% in 2019. It said the debt/GDP ratio may reach 165% in Italy.

Barclays analysts said the bar for a new euro zone debt crisis was high versus 2010-12, noting a sharp fall in financing costs.

They added that they expected the U.S. debt/GDP ratio to increase almost 30 percentage points over the next two years.

Reporting by Dhara Ranasinghe; Editing by Saikat Chatterjee

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below